To keep with the rapidly evolving digitization, banks have have chosen CBDC as their weapon. A major chunk of central banks across the world are now examining the implications of CBDC a.k.a central bank digital currencies. The latest one to jump in the bandwagon is United Arab Emirates.
UAE’s central bank, CBUAE, gas announced seven objectives to foster the digital transformation in the country’s financial sector. This includes the issuance of a digital currency by leveraging artificial intelligence [AI] and big data solutions.
This was revealed in the central bank’s strategy for its 2023-2026. The main aim is to position itself among the top 10 central banks in the world. Besides, that Western Asian country had also been reportedly piloting blockchain-powered digital currencies with Saudi Arabia as part of Project Aber.
According to the official announcement by Emirates News Agency, the strategy will encompass innovation with regards to across inspection, monitoring and insurance systems. In addition to UAE’s very own CBDC, central bank also plans to utilize the country’s digital ID infrastructure [UAE Pass] to drive financial inclusion as well as easy access to financial services.
The latest news comes months after UAE teamed up with China for the cross-border payments project known as Multiple CBDC [m-CBDC] Bridge. The initiave aim to design a Proof-of-Concept [PoC] prototype to facilitate real-time cross-border foreign exchange payments on distributed ledger technology.
CBDCs around the world
UAE’s CBDC plans also comes at the heels of the Bank of Korea’s intenstion to pick an operator to run its pilot that is set to go on floor in August this year. Earlier this month, the Prime Minister of Vietnam, Pham Minh also encouraged the country’s central bank to conduct a digital currency project.
Last week, the International Monetary Fund [IMF] and the World Bank jointly highlighted the cross-border benefits of CBDCs and claimed that projects like the US’ digital dollar would help in global development. The two entities, along with Bank for International Settlements [BIS], also published released a paper advocating the need for its adoption.
CBDC rollout concerns
The cental bank digital currencies offer an opportunity for the current monetary system. However, the vulnerability with digital currency issued by central banks needs to be addressed. It important to acknowledge the potential ransomware attacks as well as cyberespionage between different countries also continues to accelerate at an exceedingly alarming pace and their consequence on CBDCs.
Lewis Cohen, who happens to be the co-founder of DLx law firm, chimed in the matter and and stated,
“Regular folks [or even huge megacorp’s] don’t have access [for CBDC]. The feds doesn’t keep stacks of Banknote with dollar signBanknote with dollar signBanknote with dollar sign around [as we do with gold [eg, Ft Knox]. All those banks actually “have” are entries in a centralized electronic ledger.”
He also went on to add,
“So if we are talking about a centralized hacking/ransomware target that would create financial mayhem if breached, we have had that already for decades. This said, even if the potential for mayhem due to cyber attack is not new for the financial system [or unique to a CBDC], there are indeed plenty of reasons to be concerned about introducing #CBDCs that would be available to retail.”