The United Arab Emirates will be rolling out central bank digital currencies (CBDCs), with its Digital Dirham scheduled for launch between October and December this year. The Central Bank of the UAE (CBUAE) confirmed the timeline. The CBUAE has also introduced a dedicated wallet to manage the Digital Dirham, while unveiling a new symbol that will be used for both digital and fiat versions of the currency.
CBDC is termed to be a cornerstone of the country’s broader ambition to build a more secure, cost-efficient, and transparent financial ecosystem. The central bank has stated that individuals and businesses will be able to access the CBDC via licensed institutions including banks, fintech firms, finance companies, and exchange houses.
What are CBDCs?
A central component of the UAE’s Financial Infrastructure Transformation (FIT) programme, CBDCs were launched in 2023. CBDCs are blockchain-based versions of sovereign currencies, backed and issued by central banks. Unlike cryptocurrencies, which are decentralized and volatile, CBDCs offer the benefits of digital money, such as speed and traceability, while retaining the stability of traditional fiat. Every CBDC transaction is recorded on a blockchain, making it traceable and reducing dependency on cash.
In the UAE’s case, the Digital Dirham is also expected to play a key role in tackling financial crime. According to the CBUAE, encrypted records on blockchain networks will assist law enforcement by leaving a digital trail for transactions involving illicit funds. Through initiatives such as tokenization and smart contracts, the country aims to future-proof its financial sector.
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