The UAE Central Bank has begun implementing its digital currency strategy, Digital Dirham, as it prepares the country's infrastructure for the future of finance.
It signed an agreement with Abu Dhabi's G42 Cloud and digital finance services provider R3 to be the infrastructure and technology providers, respectively, for the implementation of its central bank digital currency (CBDC), the regulator said in a statement on Thursday.
Digital Dirham aims to address the “pain points” of domestic and cross-border payments, enhance financial inclusion and the move towards a cashless society, and further strengthen the UAE's payment infrastructure by providing additional channels, it said.
The strategy, one of the nine initiatives of the Financial Infrastructure Transformation programme launched by the Central Bank in February, will “further position and solidify the UAE as a leading global financial hub”, said Khaled Balama, Governor of the UAE Central Bank.
“The launch of our CBDC strategy marks a key step in the evolution of money and payments in the country. The CBDC will accelerate our digitalisation journey and promote financial inclusion,” he said.
A CBDC is a digital form of a government-issued currency. They are similar to cryptocurrencies, except that their value is fixed by the monetary authority and equal to the country's fiat currency.
CBDCs are expected to provide some middle ground for the highly volatile cryptocurrency market. They reduce the risks associated with using cryptocurrency and provide a stable means of exchanging digital assets.
“CBDC is a risk-free form of digital money issued and guaranteed by the central bank and serves as a secure, cost-effective and efficient form of payment and a store of value,” the Central Bank said.
Central banks around the world are looking into the development of digital currencies amid the growing popularity of cryptocurrencies as an asset class among retail and institutional investors.
As of March 1, there are 65 countries that are in advanced stages of CBDC development, with more than 20 central banks having already launched their pilot programmes, according to the US-based think tank Atlantic Council.
The UAE has been identified as among 18 countries that have made the “most progress” in CBDCs in 2023, joining a list that includes Australia, Brazil, Canada, China, India, Japan, Jordan, Kazakhstan, Laos, Montenegro, the Philippines, Russia, Saudi Arabia, Turkey, Ukraine, the UK and the US, it said.
"Countries that are part of the CBDC mechanism are better positioned to enjoy and reap the benefits of globalisation and keep pace with more recent international FinTech advances," Arun John, chief market analyst at Century Financial, said.
Aside from boosting the competitiveness of the UAE as a "central FinTech hub", the CBDC would help address issues "more smoothly and holistically", including "ensuring maximum inclusion of the population in the banking system, and reducing fraud and money laundering", he said.
The UAE Central Bank said its strategy aims to “ensure the readiness of the UAE to integrate the payment infrastructures with the future potential tokenisation world, [and] the tokenisation of the financial and non-financial activities”.
The launch of our CBDC strategy marks a key step in the evolution of money and payments in the country. The CBDC will accelerate our digitalisation journey and promote financial inclusion
Khaled Balama,
UAE Central Bank Governor
Tokenisation is a process that replaces sensitive data such as bank and credit card numbers, with alternative codes on the blockchain called “tokens”. This boosts security by removing the most valuable data that cyber criminals can steal during the transaction process.
Global tokenised payment transactions are expected to increase 47 per cent to more than 1 trillion by 2026 from about 680 billion in 2022, according to data from Juniper Research.
The implementation of Digital Dirham comes as the UAE Central Bank enters the “next major milestone” of its CBDC strategy, and after previous successful partnerships and initiatives, including Project Aber with Saudi Arabia's central bank in 2020, and the mBridge project for cross-border CBDC transactions for international trade settlements, it said.
The mBridge initiative was carried out last year in collaboration with the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People's Bank of China and the Bank for International Settlements.
Last week, the UAE Central Bank and the Reserve Bank of India signed an initial agreement to boost co-operation and enable innovation in financial products and services, part of which is conducting proof-of-concept and pilots of a bilateral CBDC bridge to enable cross-border CBDC transactions of remittances and trade.
“We look forward to exploring the opportunities that CBDC will bring to the wider economy and society,” said Mr Balama.
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MATCH INFO
Southampton 0
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Man of the match: Kevin de Bruyne (Manchester City)
Analysis
Members of Syria's Alawite minority community face threat in their heartland after one of the deadliest days in country’s recent history. Read more
Zayed Sustainability Prize
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Five films to watch
Castle in the Sky (1986)
Grave of the Fireflies (1988)
Only Yesterday (1991)
Pom Poki (1994)
The Tale of Princess Kaguya (2013)
Mohammed bin Zayed Majlis
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Zayed Sustainability Prize
Timeline
2012-2015
The company offers payments/bribes to win key contracts in the Middle East
May 2017
The UK SFO officially opens investigation into Petrofac’s use of agents, corruption, and potential bribery to secure contracts
September 2021
Petrofac pleads guilty to seven counts of failing to prevent bribery under the UK Bribery Act
October 2021
Court fines Petrofac £77 million for bribery. Former executive receives a two-year suspended sentence
December 2024
Petrofac enters into comprehensive restructuring to strengthen the financial position of the group
May 2025
The High Court of England and Wales approves the company’s restructuring plan
July 2025
The Court of Appeal issues a judgment challenging parts of the restructuring plan
August 2025
Petrofac issues a business update to execute the restructuring and confirms it will appeal the Court of Appeal decision
October 2025
Petrofac loses a major TenneT offshore wind contract worth €13 billion. Holding company files for administration in the UK. Petrofac delisted from the London Stock Exchange
November 2025
180 Petrofac employees laid off in the UAE
The biog
Marital status: Separated with two young daughters
Education: Master's degree from American Univeristy of Cairo
Favourite book: That Is How They Defeat Despair by Salwa Aladian
Favourite Motto: Their happiness is your happiness
Goal: For Nefsy to become his legacy long after he is gon
Secret Nation: The Hidden Armenians of Turkey
Avedis Hadjian, (IB Tauris)
Tonight's Chat on The National
Tonight's Chat is a series of online conversations on The National. The series features a diverse range of celebrities, politicians and business leaders from around the Arab world.
Tonight’s Chat host Ricardo Karam is a renowned author and broadcaster who has previously interviewed Bill Gates, Carlos Ghosn, Andre Agassi and the late Zaha Hadid, among others.
Intellectually curious and thought-provoking, Tonight’s Chat moves the conversation forward.
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The biog
Name: Salvador Toriano Jr
Age: 59
From: Laguna, The Philippines
Favourite dish: Seabass or Fish and Chips
Hobbies: When he’s not in the restaurant, he still likes to cook, along with walking and meeting up with friends.
