The UAE’s Digital Dirham is ready and will be introduced in phases “very soon”, according to a senior executive at the UAE Central Bank.
“Phase one has a number of use-cases that are tailored and aligned with the digital economy,” Paul Kayrouz, chief FinTech officer at the UAE Central Bank, said during a session in Abu Dhabi Finance Week.
The UAE Central Bank began implementing its digital currency strategy in March 2023.
The Digital Dirham is a digital version of the UAE’s national currency, enabling instant settlements and widespread accessibility with the security and trust of traditional central bank-backed money.
The launch of the Digital Dirham will also benefit tourists, helping them to make transactions anywhere in the country, Mr Kayrouz said.
“We will enable tourists that come to the UAE to top up their CBDC [Central bank digital currency] wallet with any account or any wallet they may have, convert any currency to digital, spend the Digital Dirham in the UAE, and then on the way back, convert it to whichever currency they want by the click of a button,” he said.
His comments come after the UAE government said last month that it conducted its first national transaction using the Digital Dirham.
The transaction was carried out by the Ministry of Finance and the Dubai Department of Finance, working with the UAE Central Bank.
The first transaction was executed in less than two minutes using the mBridge platform, the digital currency settlement system developed by the Central Bank.
Sheikh Mansour bin Zayed, Vice President, Deputy Prime Minister and Chairman of the Presidential Court, also made the first cross-border payment using the currency, between the Emirates and China, last month.
The CBDC transfer was made through the ‘mBridge’ network, marking the official launch of a service aimed at boosting global transactions and strengthening the financial ecosystem.
In a policy paper released in July, the Central Bank outlined the benefits of the currency, such as reducing payment costs and enabling the immediate settlement of retail, wholesale and cross-border payments.
The Digital Dirham could also expand access to financial services and help in remittance flows.
The banking regulator is also working on other projects to help make payment transactions easier, Mr Kayrouz said.
The country has been preparing regulatory frameworks for stablecoins and digital currencies, signalling that utility, clarity of regulation, and institutional adoption are critical for their success.
Local regulation in the UAE requires stablecoins to be fully backed by high-quality liquid assets and subject to audit.
In April, Abu Dhabi entities the International Holding Company, ADQ and First Abu Dhabi Bank announced plans to launch a dirham-backed stablecoin that will be fully regulated by the Central Bank.
