Interview: Khaled Mohamed Balama

To what extent can the regulatory landscape help banks benefit from disruptive technologies?

KHALED MOHAMED BALAMA: The regulatory landscape in the UAE is under continuous review to ensure that it develops in line with the changes seen in financial technology. As such, we are constantly updating regulations to enable the responsible use of emerging technologies, such as artificial intelligence, blockchain and financial cloud, while at the same time ensuring consumer protection, fair market practices and financial stability. Furthermore, through ongoing consultations with industry figures, as well as creating financial education programmes and testing environments for innovative technologies, we remain up to date with key developments in the global market to ensure that the regulatory environment encourages innovation, while maintaining our compliance with international standards and best practices.

How might developments in distributed ledger technology benefit the country?

BALAMA: Since completing its integration in April 2021, SWIFT gpi has increased the efficiency of cross-border payments, as well as the transparency and speed of remittances. The UAE implemented this system through an integration of the gpi tracker and the country’s funds transfer scheme, enabling financial institutions to track their payment flows end to end in real time. This in turn provides maximum visibility on ongoing cross-border transactions.

Nevertheless, the country aspires to explore the newest technologies and their applicability in different business areas. In this context, since 2019 the UAE has been engaged in various blockchain-related proofs-ofconcept for cross-border payments, such as mBridge project, which is run with the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China and the Bank for International Settlements. The objective of these programmes is to safely experiment with the issuance, circulation and use of the central bank digital currency (CBDC), alongside exploring the opportunities provided by distributed ledger technology, or blockchain. This will potentially result in advances in the exchange, processing and settlement of transactions, helping overcome the inefficiencies in traditional cross-border payments.

In this context, the CBUAE is exploring the use of blockchain technology for instant cross-border payments versus those for CBDC and other types of international transactions. Using CBDC and central bank money can help ease counter-party credit risk, improve efficiencies and the user experience, lower costs, and increase transparency for consumers and businesses.

Which steps must be taken to ensure sustainable growth while accounting for changes in oil prices?

BALAMA: Sustainable growth can be realised through further diversification, gradually moving away from oil and stimulating expansion across non-oil sectors. One approach is to maintain ongoing trade policies in goods and services, as well as strategies for investment promotion, green projects and the enhancement of human capital. Trade policies helped to increase non-oil goods exports and re-exports. Looking ahead, exploring new markets and engaging in cooperation negotiations aim to consolidate and advance these achievements.

Service industries have been a strong engine for diversification. These areas have seen sustained rates of growth, mainly led by travel and transport services, as the UAE is an international hub for these activities.

In terms of investment promotion, the emirate has succeeded in attracting foreign direct investment (FDI). The country will continue its efforts to further increase its FDI attractiveness, particularly in knowledge-intensive sectors. Another theme running through all policies and strategies is human capital. Developing and retaining talent – and increasing the participation rate of Emiratis in the labour market – will help the UAE in its goal of becoming a leading knowledge-based economy.