Abu Dhabi is preparing to launch a new stablecoin backed by the United Arab Emirates dirham (AED). This is a strategic move that demonstrates the country's commitment to becoming a global digital financial hub.

1. Parties Involved: This stablecoin is being developed by three major institutions:

ADQ (sovereign wealth fund)

First Abu Dhabi Bank (FAB)

International Holding Company (IHC)

This stablecoin will be fully regulated by the Central Bank of the United Arab Emirates (CBUAE) and fully backed by dirham reserves.

2. Objectives and Benefits:

Economic diversification: Reducing dependence on the US dollar and strengthening the monetary autonomy of the region.

Digital transformation: Supporting automated, efficient, and secure transactions, including use by artificial intelligence and machine-to-machine interactions.

Widespread adoption: Designed to be used by consumers, businesses, and institutions across the UAE.

3. Technology: The stablecoin will operate on a local blockchain called ADI, which supports high scalability and transparency.

4. Challenges and Prospects:

Competition: It will compete with other stablecoins, including those from Tether which are also designed with a dirham peg.

Trust and regulation: Success will depend on public acceptance and the strength and transparency of the regulations.

This move reinforces Abu Dhabi's position as a pioneer in digital financial innovation and could serve as a model for other countries in the Middle East and globally.