The UAE is moving into the launch phase of its long-planned central bank digital currency, the Digital Dirham, after locking down both the technology and legal framework needed to bring it into everyday use.

The Central Bank of the UAE (CBUAE) says the digital currency will be introduced in phases, starting with a two-tier system in which the central bank issues and redeems Digital Dirhams to licensed financial institutions, which will then distribute them to users through wallet-based accounts. Transactions will be recorded on a permissioned distributed ledger, offering both immutability and privacy via pseudonymous identifiers.

“At launch, the Digital Dirham will be non-interest-bearing to encourage its use for payments rather than as a substitute for savings,” the CBUAE said. Governor Khaled Mohamed Balama added that it would “help ensure a secure and efficient financial infrastructure for the UAE, enhance the efficiency of our payment ecosystem, support monetary stability, expand financial inclusion, and strengthen the international standing of the UAE dirham.”

The move follows a series of pilots and cross-border trials. The UAE first tested wholesale CBDC settlement with Saudi Arabia in Project Aber (2019–2020), before becoming a founding participant in the mBridge initiative led by the BIS Innovation Hub alongside Hong Kong, China and Thailand. This year, the CBUAE used the platform to process a live cross-border payment in Digital Dirham.

On the domestic side, retail pilots trialled programmable use cases, including targeted social benefit payments and a “smart tourist wallet.” The core issuance platform, built with G42 Cloud and blockchain firm R3, is now live and integrated with the country’s banking network.

The CBUAE has also amended the central bank law to give the Digital Dirham full legal tender status, allowing it to be treated on par with cash and deposits. Officials say the phased launch will help manage operational and cybersecurity risks while ensuring smooth integration with existing payment rails and future digital asset networks.

The UAE’s CBDC project sits within the central bank’s Financial Infrastructure Transformation program, a broader push to modernise payments and financial market systems. If the rollout proceeds as planned, the Digital Dirham could make the UAE as one of the first countries to run a national digital currency at scale for both domestic and cross-border use — a move watched closely by other Gulf and Asian markets exploring their own CBDC strategies.