Digital Dirham Takes Shape as UAE Conducts First CBDC Transaction

The United Arab Emirates has successfully carried out its first central bank digital currency (CBDC) transaction, marking a major step in the Digital Dirham project. The pilot transaction, conducted through the mBridge cross-border payment platform, represents the most significant development since the CBDC initiative was announced earlier this year.

Good to Know

• The UAE Ministry of Finance and Dubai Finance led the pilot transaction.
• The transfer took under two minutes to complete using the mBridge platform.
• The CBDC rollout is expected to begin in phases starting late 2025.

The Ministry of Finance and Dubai Finance confirmed the operation on Tuesday, calling it “a step towards broader adoption of the national digital currency across both government and private sector operations.”

The move follows the UAE Central Bank’s announcement in March that it planned to begin rolling out the Digital Dirham in the fourth quarter of 2025.

Ahmed Ali Meftah, executive director of central accounts at Dubai Finance, said the test was aimed at validating infrastructure and ensuring smooth system connectivity.

“The transaction was completed in less than two minutes, underscoring its goal of enhancing operational efficiency and expediting financial settlements between federal and local government entities,” he said.

Officials described the pilot as a demonstration of readiness for the full-scale deployment of the Digital Dirham, designed to modernize intergovernmental payments and strengthen financial stability.

The UAE Central Bank outlined its multi-stage rollout plan in a policy paper published in July. The document described the CBDC as a tool to “future-proof central bank money for the digital era” while addressing the evolving needs of the nation’s expanding digital economy.

Initially, the Digital Dirham will support only payments, with savings and interest-bearing functions intentionally excluded to prevent competition with commercial bank products. Later phases may explore retail and cross-border use cases.

The UAE joins a growing list of countries testing or deploying CBDCs, as central banks worldwide look to enhance financial efficiency, transparency, and sovereignty in the face of rapid fintech growth.

FAQ

What is the Digital Dirham project?

It is the UAE’s central bank digital currency initiative, designed to modernize financial infrastructure and government payments.

How long did the pilot transaction take?

The test transaction took under two minutes using the mBridge platform.

When will the Digital Dirham launch?

The Central Bank expects rollout to begin in phases during the fourth quarter of 2025.

What will the first phase include?

Payments between government entities, with no savings or interest-bearing products initially.