Digital Dirham revolution: UAE's leap in global digital finance
The Digital Dirham represents a significant step towards modernising the UAE's financial ecosystem, promoting innovation, and positioning the country as a leading player in global digital finance, experts say.
Top executives, experts, analysts and economists said the Digital Dirham will empower the Central Bank of the UAE (CBUAE) with greater monetary policy control and improved tracking of illicit activities, enhancing financial stability. They are of the view that the project aligns with the UAE's Digital Economy Strategy, aiming to double the digital economy's non-oil GDP contribution to 20 per cent by 2031.
'The
Digital Dirham, the UAE's Central Bank Digital Currency (CBDC), set for retail launch in fourth quarter of 2025, is poised to transform the UAE economy. Built on blockchain, it aims to enhance financial inclusion, streamline payments, and support a cashless society,' according to the experts.
They said fintech innovation will thrive, fostering new financial products and services. The Digital Dirham positions the UAE as a global fintech leader, driving efficiency, inclusion, and economic diversification. Currently, all the major global currencies — US dollar, euro, yen, rupee, yuan and rouble — have their symbols, reflecting their countries' strength and pride.
'The Central Bank of the UAE became the first central bank in the Arab region to introduce it. By reducing transaction costs and enabling real-time settlements, it will benefit retail consumers with faster, cheaper, and secure payments. For businesses, particularly in trade finance, it will simplify cross-border transactions, crucial given the UAE's expatriate-heavy population and economy.'
A Significant Move
Governor of the CBUAE Khaled Mohamed Balama described the
new currency symbol and announcement of the design of CBDC wallet as reflecting the significant advancements in the implementation of the Digital Dirham programme and a leap towards realising the central bank's vision.
'It is anticipated that the Digital Dirham as a blockchain based platform with cutting edge capabilities shall substantially enhance financial stability, inclusion, resilience, and combatting financial crime. It will further enable the development of innovative digital products, services, and new business models, while reducing cost and increasing access to international markets.'
Vijay Valecha, Chief Investment Officer, Century Financial, said the CBUAE is slated to launch its own Central Bank Digital Currency this year, called the Digital Dirham. This marks a significant leap towards financial innovation and digitisation.
'The digital currency is being developed in partnership with two prominent technology firms, namely, G42 Cloud and R3, and will likely be released in the fourth quarter of 2025,' Valecha told Khaleej Times.
The CBUAE also developed a unique symbol for the UAE dirham in physical and digital forms in March 2025. Interestingly, the Digital Dirham is characterised by a large, encircled D with two horizontal lines passing through its center. These lines reflect the stability and resilience of the dirham. Inspiration was also drawn from the UAE flag, symbolising both financial and monetary stability. Thus, it also features the colours of the UAE flag, reinforcing its national identity.
The Digital Dirham will support retail, wholesale, and cross-border payments while leveraging blockchain, smart contracts, and tokenisation to enhance efficiency and transparency. It is backed by a robust legal framework and will be distributed through licensed banks and fintech companies to ensure widespread adoption and accessibility.
'It will also facilitate
cost-efficient transactions by reducing the intermediaries involved in cross-border payments and lower settlement times. Seamless integration with global CBDC systems and adequate defences against cybersecurity risks will drive its successful adoption.'
Advanced Digital Infrastructure
Hassan Fawaz, Chairman and Founder of GivTrade, said the UAE's introduction of new dirham symbols and digital forms represents a step towards modernising its currency system and is part of the UAE's Financial Infrastructure Transformation Programme.
'The new symbols reflect the UAE's global currency aspirations, supported by its strong economic position with record trade levels of $800 billion,' he said.
Samer Hasn, senior market analyst at XS.com, said the new symbols reflect the UAE's commitment to further cement its position as a global financial hub.
Economist Dr Abdul Rahim Al Farhan said UAE has become one of the most advanced countries in digital in the Middle East in general and the Gulf countries in particular. 'The UAE is currently on its way to becoming a global centre for digital and blockchain, thanks to its flexible regulatory policies, advanced digital infrastructure, and the huge investments of global companies, which make it a major destination for in cryptocurrencies,' Al Farhan said.
Digital Dirham to Benefit Economy
Valeecha said the launch of the digital dirham in the UAE brings several important benefits to both the general economy and the financial sector. It is part of the country's broader Financial Infrastructure Transformation Programme, which aims to speed up digital innovation in financial services.
For the wider UAE economy, he said the digital dirham could support the shift toward a cashless society. By promoting digital payments, it would reduce the need for physical cash, making transactions faster and more efficient.
'The CBUAE has also created the Digital Dirham wallet, which is a safe and complete system for businesses and individuals to issue, manage, and use the digital currency. This would allow for more secure and private transactions, which builds trust and reduces the risk of fraud or misuse,' he said.
In addition, the cost of payments and money transfers will also go down because digital currency can work without as many intermediaries, such as banks or money transfer companies. The digital dirham also supports the development of new financial products and services, encouraging innovation and entrepreneurship in the UAE's growing digital economy.
For the financial sector, the digital dirham can be used with smart contracts to automatically execute complex deals or conditions including multi-party or multi-step agreements.
Moreover, the digital dirham supports cross-border payments, which can improve international trade and capital flows into the country. It also allows for tokenisation and fractional ownership of assets, which would increase access to liquidity and participation in the financial system.
'Overall, the digital dirham may help make the UAE's financial system safer and more streamlined. It is also expected to support new types of businesses and make it easier to connect with international markets, while lowering costs and giving more people and companies access to financial services,' Valeecha said.
Accelerating Digital Currency Project
Vijay Valecha, Chief Investment Officer, Century Financial, said the Digital Dirham is poised to significantly enhance the UAE's digital currency efforts, as indicated by the CBUAE.
'In line with the broader Financial Infrastructure Transformation (FIT) programme initiated in 2023, the CBUAE is gradually launching the Digital Dirham. This digital currency, recognised as a universal payment method under Federal Decree-Law No. (54) of 2023 will be usable across all payment platforms and channels in conjunction with physical currency,' he said.
The Digital Dirham presents significant benefits and features promoting development and innovation, such as:
Tokenisation: The Digital Dirham facilitates the process of tokenisation, thereby enhancing financial inclusion and efficiency while simultaneously expanding access to liquidity through digital assets fractionalisation.
Smart contracts: The Digital Dirham utilises smart contracts to automate the execution of complex transactions, ensuring instant settlement. This includes handling multi-stage and multi-party transactions that require specific conditions or obligations.
The key objectives of the Digital Dirham are:
Enhancing domestic, cross-border payments: The Digital Dirham aims to strengthen domestic and cross-border payment systems' efficiency, security, and cost-effectiveness. Digital dirham is also a part of international collaborations like Project mBridge, which explores the use of CBDCs for efficient and secure cross-border payments.
Supporting the digital economy: This initiative aligns with the UAE's extensive digital transformation strategy, which seeks to foster a strong digital economy by integrating innovative financial technologies.
Promoting financial inclusion: It seeks to offer accessible financial services to unbanked and underbanked communities, promoting increased economic involvement across all social segments.
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