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The United Arab Emirates (UAE) is accelerating towards the launch of its long-anticipated central bank digital currency (CBDC), the Digital Dirham, with the first retail issuance scheduled for Q4 2025.
UAE prepares for Digital Dirham
The initiative is a centrepiece of the Central Bank of the UAE’s (CBUAE) Financial Infrastructure Transformation (FIT) Programme.
A multi-year strategy aimed at overhauling the nation’s payments ecosystem and embedding digital innovation at the core of financial services.
Digital Dirham
Underpinned by distributed ledger technology (DLT), the Digital Dirham will be rolled out in phases to manage potential risks, using an intermediated two-tier distribution model.
Licensed financial institutions — including banks, exchange houses, finance companies and fintechs — will act as intermediaries, offering wallet-based access to individuals and businesses.
The currency will be non-interest bearing at launch, in order to promote its use as a payments instrument rather than a store of value.
The CBUAE
The CBUAE has completed the underlying infrastructure to issue, redeem and distribute the CBDC via a bespoke blockchain-enabled platform.
Transactions will be recorded on a permissioned ledger, combining immutability and pseudonymity to protect user privacy while ensuring compliance.
This architecture will integrate with existing domestic payment rails and emerging digital asset networks, allowing for a broad range of use cases.
Functionality will extend beyond person-to-person and point-of-sale transactions to include government-to-consumer disbursements, cross-border remittances, and programmable payments via smart contracts.
The CBUAE also highlights the Digital Dirham’s potential to facilitate tokenisation, enabling fractionalised digital asset ownership and expanding access to liquidity — developments that could have far-reaching implications for financial inclusion and market efficiency.
Cross-Border Capabilities
Cross-border capabilities are a priority, reflecting the UAE’s large expatriate population and its role as a global trade hub.
The CBUAE has already engaged in international CBDC experiments, including participation in the Bank for International Settlements’ mBridge project and the joint “Project Aber” with the Saudi Central Bank.
These demonstrated the Digital Dirham’s potential for real-time cross-border settlement and payment-versus-payment (PvP) functionality.
The wallet infrastructure, unveiled alongside a refreshed symbol for the UAE dirham, is designed for simplicity and interoperability.
Users will be able to make domestic and international transfers, withdraw funds, redeem digital dirhams, and top-up balances seamlessly.
The system is built to accommodate future innovations, positioning the UAE as a competitive force in global digital payments.
Governor H.E. Khaled Mohamed Balama describes the Digital Dirham as a “blockchain-based platform with cutting-edge capabilities” that will strengthen monetary stability, enhance resilience, expand inclusion, and help combat financial crime.
The project’s ambitions align closely with national economic strategies — including the UAE Digital Economy Strategy and the “We the UAE 2031” vision — both of which target a significant increase in the digital economy’s contribution to non-oil GDP over the coming decade.
By late 2025, the UAE aims to have its CBDC circulating in both retail and wholesale forms, with full integration of the FIT Programme’s broader initiatives expected in 2026.
If successful, the Digital Dirham will not only modernise domestic payments but also cement the UAE’s standing as a leader in cross-border digital currency innovation.
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