Digital UAE Currency (CBDC) to Debut in Current Year

The United Arab Emirates is gearing up to introduce its Digital Dirham CBDC for retail utilization by the end of 2025, joining an increasing number of nations delving into central bank digital currencies.

As initially reported by the Khaleej Times, the Central Bank of the UAE (CBUAE) will release the digital counterpart of the nation's official currency, AED, for the retail sector in the final quarter of 2025. The Digital Dirham CBDC will be acknowledged across all payment channels in conjunction with physical money and will be available through licensed financial establishments, including banks, exchange houses, and fintech companies. It will boast high-security features, tokenization, and smart contract integration, enabling instantaneous settlements and multi-party transactions.

Moreover, CBUAE has created an integrated Digital Dirham platform and wallet, which facilitate retail, wholesale, and cross-border transactions.

The announcement comes after a rebranding of the Digital Dirham, with its initial letter now functioning as the international symbol.

The UAE's path towards a digital currency commenced in June 2024 with the implementation of a stablecoin regulatory framework, which established licensing guidelines for dirham-backed stablecoins. This sparked several significant initiatives, including an effort from Tether (USDT) to issue AED-backed tokens.

However, the Digital Dirham CBDC signifies a crucial advancement, surpassing private-sector stablecoins. As a digitally-issued sovereign currency, it offers a higher degree of security, regulatory supervision, and monetary authority than privately issued tokens.

In the CBDC realm, the UAE has collaborated with other nations, such as Saudi Arabia, in the "Aber" project, a joint CBDC endeavor between the two countries to investigate cross-border payments using digital currencies.

Currently, the UAE is in the testing and development stage of its Digital Dirham, alongside a rising number of countries that are also conducting pilot programs of their own CBDCs, including Russia, China, Sweden, Korea, Brazil, and the United Kingdom, among others. The European Central Bank is also carrying out a multi-year trial of the Digital Euro.