Pilot central bank digital currency platform reaches MVP stage

Central banks including the Central Bank of the UAE unveiled the initial operational prototype of a multi-central bank digital currency (CBDC) platform for early use, a press release (pdf) reads. The Bank of International Settlements-led trial — a collaboration between the UAE, Hong Kong, China, and Thailand — is developing a platform that can facilitate cross-border digital currency transactions using the code China's e-CNY is built on.

The platform is also now compatible with the Ethereum Virtual Machine, which forms the backbone of the network on which the Ether cryptocurrency operates.

The minimum viable product (MVP) stage is the first phase of the CBUAE’s broader CBDC strategy, with the second phase poised to introduce domestic CBDC payments and boost cross-border fund transfers. The platform comes as part of the CBUAE's financial infrastructure transformation program (pdf), which aims to accelerate the digitization of the financial services sector.

Remember: Vice President Sheikh Mansour bin Zayed Al Nahyan marked the CBUAE’s fiftieth anniversary by initiating the first cross-border transaction using its digital currency, the Digital AED, earlier this year. The transfer saw AED 50 mn sent to China through mBridge.

AND- Saudi Arabia has joined the trial, the Bank of International Settlements said in a statement. The Kingdom’s participation as the world’s largest oil exporter means we could start seeing significantly more commodity settlement in currencies beyond the USD, Josh Lipsky, who runs a global CBDC tracker, said.

Both Saudi Arabia and the UAE have already been working on boosting trade transactions in local currencies, with Saudi signing a currency swap agreement with China in December. The UAE has also begun to accept INR payments for oil as of last year.