UAE to Launch CBDC in Q4 2025

The Central Bank of the UAE announced it will launch its Digital Dirham central bank digital cy (CBDC) in the fourth quarter of this year. That’s when it plans to launch the retail version of the CBDC, which will be treated as legal tender, requiring people to accept it for payment. The central bank also intends to use the CBDC for wholesale and cross border payment purposes.

Alongside the launch of the digital cy, it will also make a Digital Dirham wallet available. While others such as Europe are focused on CBDC for everyday transactions, the central bank clearly has its sights on financial use cases. Hence, the blockchain-based CBDC will be distributed via banks, exchanges, finance companies and fintechs. It views the fractionalization enabled by tokenization as “enhancing financial inclusion”.

Programmability through the use of smart contracts will support the automation of complex transactions as well as atomic settlement. The UAE has leaned into blockchain and cryptocy in a big way with the two international financial centers, Dubai’s DIFC and Abu Dhabi’s ADGM, providing a supportive regulatory regime. Additionally, state-linked MGX recently invested in crypto exchange, Binance.

“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,” said H.E. Khaled Mohamed Balama, Governor of the CBUAE.“It will further enable the development of innovative digital products, services, and new business models, while reducing cost and increasing access to international markets.”

Two years ago the central bank announced an agreement to work with blockchain firm R3 on the development of the CBDC. Last year it executed the first transactions on mBridge the cross border CBDC platform that was jointly developed by the central banks of the UAE, China, Hong Kong and Thailand, as well as the BIS. However, the BIS withdrew last year.  Before that, the UAE collaborated with India on cross border CBDC trials. One of its earliest experiments was for wholesale CBDC, as part of Project Aber with Saudi Arabia. Both countries currencies are pegged to the US dollar.