UAE Plans to Launch Retail Central Bank Digital Currency in 2025
The Central Bank of the United Arab Emirates (CBUAE) plans to introduce a retail central bank digital currency (CBDC), known as the digital dirham, in the fourth quarter of 2025.
This initiative is a key part of the Financial Infrastructure Transformation (FIT) Programme, launched in 2023 to modernize financial services. The program aims to boost financial inclusion, enhance payment security, and support a cashless economy.
Digital Dirham’s Role in UAE’s Financial Growth
As of January 2025, the CBUAE reported that the FIT Programme was 85% complete. The central bank expects full integration by 2026. The latest update, published on March 27, coincided with the unveiling of a new currency symbol and the UAE’s commitment to the FX Global Code.
The CBUAE highlighted the digital dirham’s security and efficiency benefits. It also outlined legislative updates needed to ensure its acceptance as legal tender alongside physical currency.
What is a Retail CBDC?
Unlike wholesale CBDCs, which are used for interbank transactions, retail CBDCs are designed for public use.
Key Features of the Digital Dirham
The CBUAE outlined several benefits of the digital dirham. Built on blockchain technology, the currency will offer secure, instant transactions while lowering costs. It will also improve risk management and data protection.
Licensed financial institutions—including banks, exchange houses, and fintech firms—will distribute the digital dirham. Its tokenization feature will expand liquidity access, while smart contracts will automate complex transactions.
Blockchain and Digital Dirham
Blockchain, a decentralized digital ledger, underpins most CBDCs. The digital dirham will rely on this technology to ensure security and efficiency in transactions.
To support its adoption, the CBUAE has developed a Digital Dirham wallet. This integrated platform will facilitate retail and wholesale payments, cross-border transfers, withdrawals, and money top-ups.
The platform is also designed for flexibility, allowing for new financial solutions. This will help strengthen the UAE’s position as a global fintech leader.
Advancing Economic Innovation
CBUAE Governor H.E. Khaled Mohamed Balama called the digital dirham a major step forward for the UAE’s financial system.
He stated that this blockchain-based currency will enhance financial stability, resilience, and innovation while helping fight financial crime. Additionally, it will open new business opportunities and increase international market access.
UAE’s Role in Global CBDC Projects
In January 2025, the CBUAE achieved a milestone by completing its first cross-border payment using the digital dirham. The AED 50 million ($13.6 million) transaction took place with China via the mBridge blockchain platform.
The mBridge project, launched in 2021, includes collaboration between the Bank for International Settlements (BIS) Innovation Hub, the People’s Bank of China, the Bank of Thailand, the Hong Kong Monetary Authority, and the CBUAE. The Saudi Central Bank joined in 2024.
Beyond mBridge, the CBUAE partnered with the Saudi Central Bank in Project Aber. This initiative tested a wholesale CBDC for domestic and cross-border transactions.
A Step Towards the UAE’s Digital Vision
The digital dirham aligns with the UAE Digital Economy Strategy, which launched in April 2022. This strategy aims to double the digital economy’s contribution to non-oil GDP within a decade.
It is also part of the ‘We the UAE 2031’ vision, which focuses on advancing the country’s financial and digital infrastructure.
With a strong emphasis on digital transformation, the UAE is positioning itself as a global leader in CBDC adoption. The launch of the digital dirham will play a vital role in achieving this goal.
