Key Highlights
- •The UAE conducted its first government transaction using the Digital Dirham through the mBridge platform.
- •The Central Bank states the pilot demonstrates the country's readiness for large-scale CBDC adoption.
- •The transaction was completed in under two minutes, showcasing real-time settlement capabilities.
A Milestone for National Digital Finance
The United Arab Emirates has officially entered a new phase in its financial evolution. On Tuesday, the Ministry of Finance and Dubai’s Department of Finance executed the nation’s first government-to-government transaction using the Digital Dirham, the Central Bank’s central bank digital currency (CBDC).
The payment was processed through mBridge, the UAE’s multi-CBDC settlement platform, and was completed in less than two minutes, demonstrating the system’s technical maturity and operational readiness.
The pilot marks the start of the Digital Dirham’s rollout under the Central Bank’s Financial Infrastructure Transformation (FIT) program, launched to modernize the country’s payment systems and expand digital inclusion.
This transaction is more than a technological test; it represents a defining step toward a cashless, fully digital economy. The Digital Dirham allows instant settlements between federal and local entities, reducing costs, improving transparency, and eliminating intermediaries.
Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Prime Minister and Minister of Finance, called the pilot a “pivotal milestone in the history of government financial transformation.” He stated that it reflects the UAE’s commitment to transparency and efficiency in public finance management.
The Central Bank indicated that the UAE’s first phase includes cross-border pilots with India and full participation in mBridge, a multi-CBDC network designed for faster and verified trade settlements.
Building an Integrated Digital Economy
The Central Bank of the UAE (CBUAE) first outlined its CBDC strategy in 2023. This strategy involved partnering with R3 and G42 Cloud to develop a secure and scalable digital currency infrastructure. The Digital Dirham aims to improve payments, boost resilience, and prepare the UAE for a tokenized economy.
Sheikh Mansour bin Zayed Al Nahyan, Vice President and Chairman of the CBUAE, described the Digital Dirham as a “strategic pillar” of the nation’s digital economy. The Central Bank has plans to expand CBDC usage across commerce, banking, and trade.
A Wider Digital Strategy
This initiative aligns with the UAE’s broader agenda concerning digital assets and transparency. In September, the Ministry of Finance joined the OECD’s Crypto-Asset Reporting Framework (CARF), committing to share crypto tax data globally by 2028.
The UAE has also become a notable Bitcoin holder, with approximately 6,333 BTC (valued at $740 million) mined domestically through the government-backed Citadel Mining. This development highlights the UAE’s focus on building digital assets rather than engaging in speculation, thereby strengthening its supportive stance towards cryptocurrencies.
Why it Matters
The Digital Dirham’s first live application signifies that central bank digital currencies are transitioning from theoretical concepts to practical implementations. The UAE is actively developing blockchain-backed payments into functional infrastructure, not only for enhanced efficiency but also for bolstering its global competitiveness.
As the mBridge platform facilitates connections between regional economies, the UAE's strategy could serve as a blueprint for digitizing money while preserving national control and ensuring financial stability.