In preparation for the launch of the UAE’s national digital currency and in support of digital transformation and the evolving digital economy, the Central Bank of the UAE (CBUAE) has released a comprehensive report on the “Digital Dirham” project.
The report offers a detailed review of the key achievements to date, along with an extensive analysis of the ongoing research and development as the CBUAE approaches the official launch of the national central bank digital currency (CBDC) in the near term. It encompasses the design principles and policy frameworks that have influenced the evolution of the Digital Dirham, ensuring it remains secure, reliable, and user-friendly, in accordance with best practices and standards issued by the International Monetary Fund (IMF) and the Bank for International Settlements (BIS).
Enhancing payment efficiency
Additionally, it underscores the CBUAE’s close collaboration with the financial sector and strategic partners to facilitate the effective adoption of the Digital Dirham. The report delineates the capabilities of the Digital Dirham and its role in driving innovation and financial inclusion, enabling access for the unbanked and non-residents in the UAE, accelerating transactions and enhancing the efficiency of payment systems through features such as offline usability, smart contracts, and cross-border transactions.
The Digital Dirham serves as the digital alternative to physical money and can be utilized for a broad array of payments, including online, in-store, commercial, and peer-to-peer transactions. Furthermore, the CBUAE has developed a comprehensive platform for issuing, trading, and using the Digital Dirham, including the digital wallet, which allows individuals and businesses to engage in financial transactions.
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Proactive response to digital economy needs
Commenting on this significant milestone, Khaled Mohamed Balama, governor of the CBUAE, stated, “The Digital Dirham represents one of the CBUAE’s key strategic initiatives shaping the future of financial services in the UAE and marks an important achievement in the global development of central bank digital currencies. The Digital Dirham will help ensure a secure and efficient financial infrastructure for the UAE, enhance the efficiency of our payment ecosystem, support monetary stability, expand financial inclusion, and strengthen the international standing of the UAE Dirham.” He added, “We will continue to rigorously assess the design and development of the Digital Dirham to ensure its successful rollout and transformational impact through a consistent and prudent approach.”
The introduction of the Digital Dirham is part of the CBUAE’s Financial Infrastructure Transformation (FIT) program, which was launched in 2023. This follows as a proactive response to the evolving needs of a digital economy while maintaining public confidence in the national currency. The CBUAE has already initiated a cross-border application of the Digital Dirham and conducted a real-value retail pilot to evaluate its future design, technology, and advantages, as well as key digital economy use cases to determine the feasibility and effectiveness of the Digital Dirham.
