The UAE has placed itself among the increasing number of countries exploring digital versions of their national currencies with its Digital Dirham initiative.

According to the Central Bank of the UAE (CBUAE), the Digital Dirham will be accessible through authorized financial institutions, including banks and fintech companies. This virtual currency will coexist with physical cash and can be used across various payment channels. Its design includes advanced features like tokenization, smart contracts, and robust security measures to enable swift transactions and complicated multi-party dealings.

Design and Functionality of the Digital Dirham

In preparation for its launch, the CBUAE has developed an integrated platform and wallet system supporting retail, wholesale, and cross-border transactions. The upcoming release follows a recent rebranding of the dirham symbol, now serving as an international identifier to reinforce the UAE’s status as a financial hub.

This rebranding initiative aligns with the strategic guidelines set by the country’s leadership and aims to strengthen the UAE’s financial infrastructure.

Legislative Framework

The Digital Dirham is being created under Federal Decree-Law No. (54) of 2023, which updates an earlier financial regulation law. This legal backing ensures that the digital currency will be accepted as legal tender alongside physical currency across all payment outlets.

International Recognition and Standards

The UAE Central Bank has taken a significant step by joining the FX Global Code, becoming the first central bank in the Arab region to do so. This move is intended to enhance the position of the UAE Dirham in international financial markets while improving transparency and professional standards in currency exchange practices.