The government of the UAE completed the first transaction using digital dirhams, its CBDC, to make a cross-border payment to China. The development, which leveraged the Mbridge platform, opens new horizons for cooperation, said the UAE Vice President Sheikh Mansour.
UAE Enters The Digital CBDC Age: Completes Landmark Transaction Using Digital Dirham
The Facts
The United Arab Emirates (UAE) has executed one of its first payments using the country’s central bank digital currency (CBDC), the digital dirham.
According to local media, the payment was expedited by Sheikh Mansour bin Zayed, Vice President, Deputy Prime Minister, and Chairman of the Presidential Court, on Wednesday.
The transaction, which was executed during a meeting with Pan Gongsheng, Governor of the People’s Bank of China (PBOC), utilized Mbridge, a system developed in collaboration among China, Hong Kong, Thailand, and the UAE, with the support of the Bank for International Settlements (BIS).
Read more: Mbridge Project Has Observers Worried About Advances of the Digital Yuan
Commenting on the relevance of the development, Mansour stated:
These advanced initiatives reflect the depth of the strategic partnership between the United Arab Emirates and the People’s Republic of China, and open new horizons for economic, financial, and technological cooperation.
The two countries also signed a memorandum of understanding (MoU) to connect their payment systems and facilitate the bilateral integration of economic and trade activities.
Why It Is Relevant
The event of executing the first payment using a national digital currency should be considered a milestone for the UAE, which now has an alternative to traditional rails to complete its payments with China.
This can be seen as an advancement that could change the payment landscape of the UAE and China, as well as Thailand and other countries that may be added to Mbridge in the future.
In the future, this shift might result in the reconfiguration of the payments arena, leaving SWIFT and other legacy systems that are prone to obey sanctions from world powers behind.
Looking Forward
More countries will implement this system, as China and the UAE will serve as participants of this experiment before the inclusion of Russia and other BRICS countries later on.
FAQ
-
What recent milestone did the UAE achieve with its digital currency?
The UAE executed its first payment using the central bank digital currency (CBDC), known as the digital dirham. -
Who facilitated this initial transaction?
The payment was expedited by Sheikh Mansour bin Zayed during a meeting with Pan Gongsheng, the Governor of the People’s Bank of China. -
What system was used for this payment?
The transaction utilized Mbridge, a collaborative system developed by China, Hong Kong, Thailand, and the UAE, supported by the Bank for International Settlements (BIS). -
Why is this development significant for the UAE and China?
This payment marks a key advancement in economic, financial, and technological cooperation between the two nations, potentially reshaping the payments landscape and reducing reliance on traditional systems like SWIFT.