Global: UAE Nears Rollout of Digital Dirham to Boost Financial Innovation and Inclusion

The Central Bank of the UAE (CBUAE) is in the final stages of launching its long-anticipated retail and wholesale central bank digital currency (CBDC) — the Digital Dirham — designed to enhance the resilience, efficiency, innovation, and inclusivity of the nation’s financial system.

According to the CBUAE, the core infrastructure for the Digital Dirham is already in place, enabling issuance, redemption, and distribution to licensed financial institutions via a custom-built issuance platform leveraging distributed ledger technology (DLT).

The CBDC will be introduced in phases to manage risk, following an intermediated two-tier distribution model with wallet-based access. At launch, it will be non-interest bearing to promote payment use over savings and will be fully interchangeable with cash and deposits.

Under the system, users will have wallets linked to account identifiers, with all transactions securely recorded on a permissioned DLT. This technology will provide immutability, pseudonymous privacy safeguards, and seamless integration with existing payment infrastructures and emerging digital asset networks.

The retail Digital Dirham will support a wide range of transactions, including peer-to-peer, online, in-store, business-to-consumer, business-to-business, and government-to-consumer payments, with additional programmable functionalities for future use cases.

On the international front, the UAE is collaborating with markets across the MENA region to enable cross-border payments and offshore holdings of the Digital Dirham. The project builds on the UAE’s participation in the BIS Innovation Hub’s mBridge initiative, paving the way for cross-border settlement and payment-versus-payment capabilities.

Khaled Mohamed Balama, Governor of the CBUAE, stated:

“The Digital Dirham will help ensure a secure and efficient financial infrastructure for the UAE, enhance the efficiency of our payment ecosystem, support monetary stability, expand financial inclusion, and strengthen the international standing of the UAE Dirham.”