UAE Advances Digital Dirham for Financial Innovation

August 12, 2025 • FinTech News
UAE Advances Digital Dirham for Financial Innovation

Launch Phase Begins for National CBDC

The United Arab Emirates is preparing to launch its central bank digital currency (CBDC) – the Digital Dirham. After years of development, the Central Bank of the UAE (CBUAE) confirms both retail and wholesale versions are now entering implementation. This initiative aims to boost financial resilience, efficiency, and inclusion across the Emirates.

Technology Infrastructure Ready

The CBUAE has built core systems enabling:
✅ Digital Dirham issuance and redemption
✅ Distribution to licensed banks
✅ DLT-based transaction recording

Using a custom-built platform, the CBDC will operate through a two-tier model:

  • Financial institutions as intermediaries

  • User wallets linked to unique IDs

  • Non-interest bearing design to encourage spending

Practical Applications and Features

The Digital Dirham will support:

  • Peer-to-peer transfers

  • In-store and online payments

  • Business transactions (B2B/B2C)

  • Government benefit disbursements

  • Programmable payment conditions

All transactions will maintain:

  • Strong privacy through pseudonymity

  • Secure data recording

  • Compatibility with existing payment systems

Cross-Border Payment Innovation

Beyond domestic use, the UAE positions its CBDC for international finance:

  • Offshore holdings capability

  • Integration with mBridge project

  • Faster cross-border settlements

  • Payment-versus-payment functionality

Leadership Vision

CBUAE Governor Khaled Mohamed Balama emphasized the CBDC’s strategic value:
“The Digital Dirham will strengthen our financial infrastructure, enhance payment efficiency, support monetary stability, and broaden financial inclusion while elevating the UAE Dirham’s global standing.”

Phased Implementation Approach

The rollout will be gradual to manage risks:

  1. Initial limited testing with financial institutions

  2. Controlled public trials in select sectors

  3. Full national implementation following evaluation

Strategic Importance

This initiative reinforces the UAE’s position as:

  • A Middle Eastern fintech leader

  • An early adopter of monetary innovation

  • A bridge between traditional and digital finance

The Digital Dirham represents a cornerstone of the UAE’s digital economy transformation, combining financial stability with cutting-edge technology to serve citizens and businesses in the new digital era.