The Central Bank of the UAE (CBUAE) has announced its progress towards deploying the Digital Dirham, its digital currency.

Phased Launch and Technical Details

With the necessary technology and legal framework in place, CBUAE is now moving into the rollout phase. The Digital Dirham will be introduced in stages, beginning with a two-tier system where financial institutions issue and redeem digital dirhams to licensed organizations, which will then distribute them through wallet-based accounts.

Transactions are expected to be recorded on a permissioned distributed ledger, ensuring both immutability and privacy through pseudonymous identifiers.

CBUAE’s CBDC Project

The current announcement follows several pilots and cross-border trials. In 2019-2020, the UAE conducted a wholesale CBDC settlement pilot with Saudi Arabia under Project Aber. The CBUAE also participated in the mBridge initiative launched by the BIS Innovation Hub together with Hong Kong, China, and Thailand. By 2025, the Central Bank leveraged this platform to process its first live cross-border payment using Digital Dirhams.

On the domestic front, retail pilots tested various use cases like targeted social benefit payments and a smart tourist wallet. The issuance platform, developed in collaboration with G42 Cloud and blockchain company R3, is currently operational and integrated into the UAE’s banking network.

Additionally, CBUAE amended the central bank law to grant the Digital Dirham full legal tender status, treating it similarly to cash and deposits. Officials from the CBUAE believe that this phased approach will help manage operational and cybersecurity risks while facilitating smoother integration with existing payment systems and future digital asset networks.

As part of its broader Financial Infrastructure Transformation program, the launch of the Digital Dirham could position the UAE as one of the first countries to implement a national-scale digital currency for both domestic and cross-border use.