By late 2025, the United Arab Emirates plans to introduce its Digital Dirham CBDC for retail transactions, joining a wider trend of nations investigating central bank digital currencies.
According to earlier reports, the Central Bank of the UAE will release a digital version of the national currency, AED, specifically for the retail sector in the final quarter of 2025. The Digital Dirham CBDC will be utilized across all payment platforms alongside physical cash and will be made available through licensed financial institutions, including banks, exchange houses, and fintech companies. This digital currency will boast robust security measures, tokenization, and smart contract capabilities, allowing for immediate settlements and transactions involving multiple parties.
Furthermore, the Central Bank has created an integrated platform and wallet for the Digital Dirham, facilitating retail, wholesale, and cross-border transactions.
This announcement follows a recent rebranding of the Digital Dirham, which now features its initial letter as the international symbol.
The UAE’s venture into digital currency began in June 2024 with the introduction of a stablecoin regulatory framework, setting licensing criteria for dirham-pegged stablecoins. This move spurred several significant initiatives, including efforts by Tether to issue AED-backed tokens.
Nonetheless, the launch of the Digital Dirham CBDC signifies a major advancement that transcends private sector stablecoins. As a state-backed digital currency, it offers enhanced security, regulatory supervision, and monetary control compared to privately issued tokens.
In the realm of CBDCs, the UAE has collaborated with other nations, such as Saudi Arabia, on the “Aber” project, a joint initiative exploring cross-border payments using digital currencies.
At present, the UAE is in the development and testing phase of its Digital Dirham, joining a growing list of countries running pilot projects for their own CBDCs, including Russia, China, Sweden, Korea, Brazil, and the United Kingdom, among others. The European Central Bank is also conducting an extensive trial of the Digital Euro.