The United Arab Emirates is advancing its digital transformation with plans to officially launch the Digital Dirham, a central bank digital currency (CBDC), for retail use by the fourth quarter of 2025. The move positions the UAE among a growing list of countries exploring sovereign-backed digital currencies to modernize financial infrastructure.
As reported by Khaleej Times, the Central Bank of the UAE (CBUAE) will issue the Digital Dirham—backed by the nation’s fiat currency, AED—as an accepted legal tender across all payment channels. It will operate alongside physical cash and be made accessible through licensed financial institutions including banks, exchange houses, and fintech firms.
The CBDC will incorporate advanced features such as tokenization, smart contract integration, and enhanced security protocols. These capabilities will allow for instant settlement, programmable transactions, and efficient multi-party interactions. The CBUAE has also developed a unified platform and wallet system to support retail, wholesale, and cross-border transactions under the Digital Dirham ecosystem.
The Digital Dirham has also undergone a rebranding, with the currency’s first letter now introduced as its official international symbol, reflecting a modern identity for the UAE’s digital finance ambitions.
This national initiative follows the country’s earlier rollout of a stablecoin regulatory framework in June 2024, which provided licensing clarity for dirham-backed stablecoins. That development triggered major moves from private firms, including Tether and Reelly Tech, to explore AED-based digital tokens. However, the Digital Dirham CBDC represents a significant step forward as a sovereign-backed asset with full regulatory oversight and direct central bank control—differentiating it from privately issued stablecoins.
The UAE has also been active on the global front, partnering with Saudi Arabia on “Project Aber,” a cross-border CBDC pilot that seeks to enhance international transaction efficiency through digital currencies.
As the UAE enters the testing and development phase for its CBDC, it joins a broader international effort among countries such as China, Russia, Sweden, South Korea, Brazil, and the United Kingdom—each of which is actively piloting or developing digital currencies. The European Central Bank is also in the midst of a multi-year evaluation of the Digital Euro.
With the upcoming launch of the Digital Dirham, the UAE is reinforcing its position as a leader in financial innovation, aiming to build a more inclusive, secure, and technologically advanced monetary system.
