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 CATICOIN.IT.COM 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).
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.