According to the Khaleej Times, the Central Bank of the UAE (CBUAE) plans to introduce a digital version of the national currency, the AED, for the retail sector in the fourth quarter of 2025. The Digital Dirham CBDC will be available across all payment channels alongside physical cash and can be accessed through licensed financial institutions, including banks, exchange houses, and fintech firms. Designed with robust security features, tokenization, and smart contract integration, it will enable instant settlements and multi-party transactions.
Additionally, the CBUAE has developed an integrated Digital Dirham platform and wallet to support retail, wholesale, and cross-border transactions.
This development follows a recent rebranding of the Digital Dirham, with its first letter now representing the currency’s international symbol.
The UAE’s move toward a central bank digital currency (CBDC) began in June 2024 with the introduction of a regulatory framework for stablecoins, establishing licensing guidelines for dirham-backed digital assets. This initiative spurred significant developments, including efforts by Tether to issue AED-backed tokens.
However, the Digital Dirham CBDC marks a significant evolution beyond private-sector stablecoins. As a state-backed digital currency, it offers greater security, regulatory oversight, and monetary authority compared to privately issued tokens.
In the global CBDC landscape, the UAE has collaborated with nations such as Saudi Arabia on the Aber project, a joint initiative exploring cross-border payments using digital currencies.
The UAE is actively testing and refining the Digital Dirham, joining a growing number of countries conducting pilot programs for their own CBDCs. These include Russia, China, Sweden, South Korea, Brazil, and the United Kingdom. Meanwhile, the European Central Bank is undertaking a multi-year trial of the Digital Euro.
The CBUAE has confirmed that the Digital Dirham will officially launch between October and December. The central bank emphasized that the CBDC will enhance transaction security, improve financial efficiency, and lower the cost of national and international payments. To streamline the use and management of the digital currency, the CBUAE has also introduced a dedicated wallet system.
A CBDC is a digital representation of a fiat currency, issued on a blockchain, with each token holding the same value as its physical counterpart. Transactions conducted via CBDCs are permanently recorded on the blockchain, enhancing transparency while reducing reliance on physical cash.
The CBUAE recently unveiled additional details about the Digital Dirham, including a new symbol for both its digital and fiat versions.
CBUAE Governor Khaled Mohamed Balama expressed confidence in the Digital Dirham’s potential to enhance financial stability and inclusion while aiding law enforcement in combating financial crimes.
“This initiative will enable the development of innovative digital products, services, and new business models while reducing costs and improving access to international markets,” he stated.
The development of the Digital Dirham is a cornerstone of the CBUAE’s Financial Infrastructure Transformation (FIT) program, launched in 2023. The central bank aims to modernize the region’s financial system by leveraging tokenization and smart contracts once the CBDC is in circulation.
According to the CBUAE, the Digital Dirham will facilitate tokenization and expand liquidity access through asset fractionalization. Smart contracts will automate complex transactions involving multiple parties and conditional obligations.
The Digital Dirham will be accessible to individuals and businesses through licensed financial institutions such as banks, exchange houses, finance companies, and fintech firms. Users will also have access to a government-backed wallet system to facilitate retail, wholesale, and cross-border payments.
The global push to launch CBDCs has intensified in recent years. India has advanced its CBDC trials, with multiple banks and merchants participating. In November 2024, former Reserve Bank of India Deputy Governor T Rabi Sankar emphasized that the country would not rush the rollout of the eRupee until its impact on financial systems was thoroughly evaluated.
Meanwhile, South Korea is preparing to launch CBDC trials for real-world transactions. Other nations, including Hong Kong, Iran, Brazil, and China, are also making steady progress in their CBDC initiatives.
To support CBDC adoption, the International Monetary Fund (IMF) has proposed the REDI framework, which outlines strategies for deployment and awareness campaigns to promote global CBDC integration.
