UAE to Roll Out Digital Dirham in Phased Launch

The Central Bank of the United Arab Emirates (CBUAE) has confirmed it is preparing to introduce the Digital Dirham, a central bank digital currency (CBDC), following several years of development. The bank stated that the currency aims to strengthen the financial system's resilience, improve efficiency, and expand financial inclusion.

According to the CBUAE, the core infrastructure is already in place, enabling licensed financial institutions to issue, redeem, and distribute the Digital Dirham via a custom-built platform using distributed ledger technology (DLT). The rollout will follow a phased approach to manage risks, using an intermediated two-tier distribution model and wallet-based access.

Initially, the currency will not bear interest, in order to encourage use for transactions rather than as a savings vehicle. All transactions will be recorded on a permissioned distributed ledger, with pseudonymity to safeguard privacy while allowing integration with both existing payment systems and emerging digital asset networks.

The CBUAE says the retail CBDC will accommodate peer-to-peer, online, in-store, business, and government transactions, with potential programmability for other uses. Cross-border capabilities are also planned, with the UAE working alongside other markets, particularly in the MENA region, and participating in the BIS Innovation Hub's mBridge project.

Governor Khaled Mohamed Balama commented, "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."