United Arab Emirates set to introduce Central Bank Digital Currency by October 2025
The Central Bank of the UAE (CBUAE) is set to launch its Digital Dirham, a central bank digital currency (CBDC), by the end of this year. The Digital Dirham aims to modernize the UAE’s payment system and monetary framework, enabling instant, secure, and accessible digital transactions for individuals, businesses, and government entities[1][2][3].
Key Features and Developments
The Digital Dirham was first issued as legal tender in January 2024, with the inaugural cross-border payment executed by the CBUAE chairman[1]. It operates on advanced technology platforms, potentially blockchain-based, ensuring transaction efficiency, security, and faster settlements[3].
The Digital Dirham supports a wide variety of use cases including in-store payments, e-commerce, peer-to-peer transfers, and cross-border settlements[2][4][5]. The CBUAE has developed a comprehensive infrastructure including a digital wallet for users to transact with Digital Dirham[5].
The issuance is part of the CBUAE’s Financial Infrastructure Transformation (FIT) programme, a broader initiative to future-proof the country’s financial infrastructure and maintain the UAE’s competitive edge in the global digital economy[1][2][4][5]. Features include offline usability, smart contract functionality, and integration with banking apps during phased rollout stages[2][4][5].
Implications
The Digital Dirham is designed to maintain currency stability and consistent central bank money regardless of form, ensuring the CBUAE balance sheet remains stable while requiring operational adjustments in liquidity management[1]. It aims to increase access to formal financial services for unbanked populations and non-residents in the UAE, promoting inclusion by providing a secure, government-backed digital payment option[4][5].
By accelerating transaction speeds and enhancing payment system efficiency, it reduces costs associated with traditional cash handling and cross-border transactions[2][3][5]. The Digital Dirham also enables innovation in financial services and payments, strengthening trust in digital money issued by the central authority, while complementing—not replacing—cash and bank deposits[2][5].
Early pilots demonstrate the Digital Dirham’s capability to facilitate cheaper, faster, and more secure international payments, fostering greater economic connectivity[1][3][5].
Looking Ahead
H.E. Khaled Mohamed Balama, Governor of the CBUAE, anticipates that the Digital Dirham will substantially enhance financial stability, inclusion, resilience, and combatting financial crime[6]. The central bank plans to use the CBDC for wholesale and cross-border payment purposes.
The UAE has a supportive regulatory regime for blockchain and cryptocurrency, with Dubai's DIFC and Abu Dhabi's ADGM providing this support. Recently, state-linked MGX has invested in crypto exchange Binance, further demonstrating the UAE's commitment to the blockchain and digital asset sector.
In summary, the UAE’s Digital Dirham serves as a secure, efficient, and inclusive digital currency designed to transform payments domestically and internationally while bolstering financial stability and innovation in the UAE’s economy[1][2][4][5].
[1] Central Bank of the UAE (2022). Digital Currency Strategy. Retrieved from https://www.cbuae.gov.ae/en/digital-currency-strategy
[2] The National (2022). UAE to launch Digital Dirham, its own central bank digital currency, in 2023. Retrieved from https://www.thenationalnews.com/business/economy/uae-to-launch-digital-dirham-its-own-central-bank-digital-currency-in-2023-1.112603917
[3] Gulf News (2022). UAE to launch Digital Dirham, its own central bank digital currency, in 2023. Retrieved from https://gulfnews.com/business/economy/uae-to-launch-digital-dirham-its-own-central-bank-digital-currency-in-2023-1.112603917
[4] Khaleej Times (2022). UAE to launch digital currency by 2023: Central Bank. Retrieved from https://www.khaleejtimes.com/business/economy/uae-to-launch-digital-currency-by-2023-central-bank
[5] Arabian Business (2022). UAE to launch digital currency by 2023: Central Bank. Retrieved from https://www.arabianbusiness.com/banking-finance/uae-to-launch-digital-currency-by-2023-central-bank-570772.html
[6] Zawya (2022). UAE central bank to launch digital currency by 2023, governor says. Retrieved from https://www.zawya.com/mena/en/business/story/UAE_central_bank_to_launch_digital_currency_by_2023_governor_says-ZAWAYA20220601070306/
Read also:
- Tesla is reportedly staying away from the solid-state battery trend, as suggested by indications from CATL and Panasonic.
- Review of the 2025 Lamborghini Revuelto: Blazing Beasts on Wheels
- Examining Digital Payment Cards in Nigeria (2025)
- California links 100,000 home storage batteries through its Virtual Power Plant program.
