The Central Bank of the UAE announced it will launch its Digital Dirham central bank digital currency (CBDC) in the fourth quarter of this year.
The Central Bank of the UAE (CBUAE) is set to launch its own central bank digital currency (CBDC), known as the Digital Dirham, in the fourth quarter of 2025, according to a recent statement.
The bank stated its intention to launch the retail version of the CBDC, which will be recognized as legal tender, obligating individuals to accept it for payment. The CBUAE also plans to utilize the CBDC for wholesale and cross-border payment purposes.
In conjunction with the launch, a Digital Dirham wallet will be made available to users. While other nations such as those in Europe are focusing on CBDC for everyday transactions, the CBUAE seems to be prioritizing financial use cases for the Digital Dirham.
The CBDC, based on blockchain technology, will be distributed through banks, exchanges, finance companies, and fintechs. This method of distribution is said to be facilitating the fractionalization of financial assets, ultimately leading to "greater financial inclusion".
Furthermore, programmability via smart contracts will aid in automating complex transactions and enabling atomic settlement.
The UAE has been a strong supporter of blockchain and cryptocurrency, with its two international financial centers, Dubai’s DIFC and Abu Dhabi’s ADGM, providing a favorable regulatory environment for these industries.
Earlier this year, state-linked firm MGX also made an investment in Binance, a cryptocurrency exchange.
“It is anticipated that the Digital Dirham as a blockchain based platform with cutting edge capabilities shall substantially enhance financial stability, inclusion, resilience, and combatting financial crime,” said H.E. Khaled Mohamed Balama, Governor of the CBUAE.
“It will further enable the development of innovative digital products, services, and new business models, while reducing cost and increasing access to international markets.”
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