The Central Bank of the United Arab Emirates has become the latest monetary regulator with an interest in issuing a central bank digital currency (CBDC). According to a Gulf News report, the UAE regulator has made the issuance of a digital fiat priority in its 2023-2026 roadmap.

Earlier, the UAE central bank showed interest in CBDCs and made a few key ties in the space. It joined several other global counterparties, including the central banks of China, Thailand and Hong Kong in a multiple CBDC  Bridge  Bridge The bridge or liquidity bridge is an essential component for brokers that are enabling their clients to trade at interbank rates directly via a Prime Broker or a Prime-of-Prime (PoP). While market makers do not require a bridge in order to service its clients, brokers which are sending through orders to a liquidity provider or an electronic execution venue need a bridge to connect their trading platform to the interbank market.Bridges are used extensively in forex trading, specifically for Metatrader, the world’s most popular trading platform. Bridges can be connecting a broker to a prime of prime or to a prime broker. Connectivity providers are delivering solutions mostly oriented towards the most popular platforms in the market – MetaTrader 4 (MT4) and MT5. The component is another crucial part of proper risk mitigation for the brokerage. The Need for Bridges in Retail TradingGiven the rise of the MT4 and MT5 platforms, there has since arose a need for bridge technology. This is due to the fact that Metaquotes, the company behind MT4, only envisaged their platform being used as a purely an interface client broker trading.This means the broker set the quotes, set the spread, and traded against the client. However, the trader actually had no direct access to the wholesale forex market, yet many brokers were unwilling to let go of MT4 in favor of other platforms which already inherently supported access to the market via Electronic Communications Networks (ECN) due to MT4’s huge popularity and thus potential loss of clients. MetaTrader was not designed to communicate with banks or liquidity providers because Metaquotes didn’t implement the FIX protocol (Financial Information Exchange). The FIX protocol is an electronic communications protocol setup in the early 1990’s to provide worldwide exchange of information in real time with respect to the transactions of financial markets and instruments. As a result, software was developed by third parties to enable MetaTrader to connect traders to the interbank. The bridge or liquidity bridge is an essential component for brokers that are enabling their clients to trade at interbank rates directly via a Prime Broker or a Prime-of-Prime (PoP). While market makers do not require a bridge in order to service its clients, brokers which are sending through orders to a liquidity provider or an electronic execution venue need a bridge to connect their trading platform to the interbank market.Bridges are used extensively in forex trading, specifically for Metatrader, the world’s most popular trading platform. Bridges can be connecting a broker to a prime of prime or to a prime broker. Connectivity providers are delivering solutions mostly oriented towards the most popular platforms in the market – MetaTrader 4 (MT4) and MT5. The component is another crucial part of proper risk mitigation for the brokerage. The Need for Bridges in Retail TradingGiven the rise of the MT4 and MT5 platforms, there has since arose a need for bridge technology. This is due to the fact that Metaquotes, the company behind MT4, only envisaged their platform being used as a purely an interface client broker trading.This means the broker set the quotes, set the spread, and traded against the client. However, the trader actually had no direct access to the wholesale forex market, yet many brokers were unwilling to let go of MT4 in favor of other platforms which already inherently supported access to the market via Electronic Communications Networks (ECN) due to MT4’s huge popularity and thus potential loss of clients. MetaTrader was not designed to communicate with banks or liquidity providers because Metaquotes didn’t implement the FIX protocol (Financial Information Exchange). The FIX protocol is an electronic communications protocol setup in the early 1990’s to provide worldwide exchange of information in real time with respect to the transactions of financial markets and instruments. As a result, software was developed by third parties to enable MetaTrader to connect traders to the interbank. Read this Term to test cross-border  Payments  Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. Read this Term. Additionally, the project was joined by the BIS Innovation Hub Centre (BISIH).

In the latest roadmap, the UAE regulator has set seven objectives. Among others, it wants to drive digital transformation in the country’s financial services sector with the help of Artificial Intelligence and big data solutions.

In addition, the central bank wants to bolster financial inclusion over the 4-year plan with its digital ID infrastructure and will push the use of technology in inspection, monitoring and insurance systems.

UAE's Interest in CBDC

Earlier, the UAE regulator published a joint report on the benefits of using a distributing payment system with the Saudi Central Bank (SAMA). Moreover, the two banks mulled over running a one-year joint pilot program with CBDCs.

“The project confirmed that a cross-border dual issued currency was technically viable and that it was possible to design a distributed payment system that offers the two countries significant improvement over centralized payment systems in terms of architectural resilience,” the joint report cited.

Meanwhile, other central banks around the globe are jumping in to study the prospect of issuing a digital currency. Furthermore, the French and Swiss regulators initiated a cross-border transaction trial with two CBDCs. But, the People's Bank of China remains at the forefront with its massive public digital yuan trials.