Digital Currency Arrives in UAE: Make Store Payments Digitally and Send Online Pocket Money with Digital Dirham
Digital Dirham Set for Retail Launch in UAE Later This Year
The United Arab Emirates (UAE) is set to introduce a digital alternative to physical currency, known as the Digital Dirham, in the last quarter (Q4) of 2025. This move will allow UAE residents and visitors to make digital payments at stores, transfer money digitally, and use the Digital Dirham as an alternative to physical currency for a wide range of transactions including online and in-store payments.
The Central Bank of UAE (CBUAE) has been working diligently to develop a comprehensive platform for issuing, trading, and utilizing the Digital Dirham. This includes the creation of digital wallets to facilitate seamless financial transactions for individuals and businesses.
Before the retail rollout, the CBUAE tested four pilot use cases related to digital economy applications such as fractional ownership of tokenized assets, smart tourist wallets, and social benefit payments. These tests were designed to ensure the Digital Dirham adheres to best practices and standards issued by the International Monetary Fund (IMF) and the Bank for International Settlements (BIS).
Once launched, the Digital Dirham will be fully fungible with other forms of the dirham like cash and deposits. The CBUAE anticipates a phased rollout for secure adoption and trust building. Following the Q4 2025 retail launch, a mandatory nationwide adoption by all banks is expected in 2026, completing widespread integration.
The Digital Dirham forms part of the CBUAE’s multi-year Financial Infrastructure Transformation program, emphasizing modernization and future-proofing of digital payments and central bank money. The aim is to drive innovation and financial inclusion, providing access to those who are unbanked and non-residents in the UAE, improving transaction speed and payment system efficiency through features like offline usability, smart contracts, and cross-border transactions.
In the social benefits use case, the Ministry of Community Development (MOCD) distributed food subsidies via programmable Digital Dirham, demonstrating its potential to streamline government services and improve the lives of citizens.
The CBUAE is also exploring developing other cross-border CBDC arrangements, collaborating with central banks, commercial banks, industry partners, and international bodies. This ambitious plan underscores the UAE's commitment to becoming a global hub for digital economy innovation.
In conclusion, the retail rollout of the Digital Dirham is planned for the final quarter of 2025, with full bank adoption to follow in 2026, marking a significant step towards a cashless digital economy in the UAE. This move is expected to make financial dealings easy and seamless, driving innovation and financial inclusion, and improving the lives of UAE residents and visitors.
[1] Central Bank of the UAE (CBUAE). (2022). Digital Dirham: Central Bank Digital Currency (CBDC) for the UAE. Retrieved from https://www.cbuae.ae/en/news-and-events/digital-dirham-central-bank-digital-currency-cbdc-for-the-uae
[2] Central Bank of the UAE (CBUAE). (2021). Digital Dirham: Prototype App. Retrieved from https://www.cbuae.ae/en/news-and-events/digital-dirham-prototype-app
[3] Central Bank of the UAE (CBUAE). (2021). Digital Dirham: Key Achievements and Capabilities. Retrieved from https://www.cbuae.ae/en/news-and-events/digital-dirham-key-achievements-and-capabilities
[4] Central Bank of the UAE (CBUAE). (2022). Digital Dirham: Design Principles and Policy Frameworks. Retrieved from https://www.cbuae.ae/en/news-and-events/digital-dirham-design-principles-and-policy-frameworks
[5] Central Bank of the UAE (CBUAE). (2022). Digital Dirham: Rollout Timeline and Context. Retrieved from https://www.cbuae.ae/en/news-and-events/digital-dirham-rollout-timeline-and-context
[1] The UAE's Central Bank Digital Currency (CBDC), the Digital Dirham, promises to revolutionize the way UAE residents and visitors make transactions, including entertainment, sports, and food purchases, as well as money transfers.
[2] The Digital Dirham could potentially streamline news and finance-related businesses, offering more efficient and faster digital payments.
[3] With its potential use in smart tourist wallets and cross-border transactions, the Digital Dirham might pave the way for a more tech-savvy business landscape, transforming sectors like technology and business.
[4] The Digital Dirham, due for retail launch in Q4 2025, aims to improve financial inclusion by providing access to the unbanked and non-residents, thereby facilitating a seamless digital economy.
