The United Arab Emirates has taken its national digital currency project to the next step with the successful execution of a government transaction through the Digital Dirham, its central bank digital currency. According to the reports, the payment was made using the multi-CBDC platform mBridge, which took less than two minutes to complete. This proves the system’s improving technological preparedness.

Although the UAE has conducted various cross-border CBDC tests, including a notable transfer to China back in early 2024, this represents one of the first local government-level payment pilots under the most recent phase of the Digital Dirham rollout.

Image Source: X

Fast, Secure, and Operationally Ready

The transaction was performed in an inter-government settlement test involving the UAE’s Digital Dirham with key financial governance entities.

Ahmed Ali Meftah, Executive Director of Central Accounts at Dubai Finance, said the speedy settlement reflected the efficiency and coordination that had emerged between the CBDC infrastructure and existing government payment systems.

Reports indicate that this successful test demonstrates how the Digital Dirham can streamline financial processes across both federal and local government entities.

A Phased Rollout with Initial Focus on Payments

The CBUAE has developed a phased, structured approach to CBDCs, which is outlined in the country’s July policy paper.

Key early-stage features include:

• A focus on payment and settlement capabilities, rather than savings or interest-bearing products.
• Design choices that aim to coexist with, not replace, traditional financial services.
• Gradual expansion into cross-border, wholesale, and future retail applications.

The goal here aligns with the UAE’s wider strategy to modernize its monetary infrastructure, striking a balance between innovation, financial stability, and user privacy concerns.

UAE’s Role in the Global CBDC Landscape

Central banks around the world are only beginning to develop their digital currencies.

According to the Atlantic Council’s CBDC tracker:

Only a very few countries have so far introduced fully active retail CBDCs, and they are the Bahamas, Jamaica, and Nigeria.

• Over 40+ nations, including the UAE, are in pilot or advanced testing phases
• Cross-border systems like mBridge will, therefore, represent very important testing grounds for multi-CBDC interoperability.

The Digital Dirham project, led by the Central Bank of the UAE, in cooperation with the Ministry of Finance and Dubai Finance, reinforces the UAE’s position as a regional and global leader in digital finance transformation.

In the grand scheme of things, ZebPay blogs are here to provide you with crypto wisdom. Get started today and join 6 million+ registered users to explore endless features on ZebPay!

Frequently Asked Questions

1. What is the Digital Dirham?

It is a UAE central bank digital currency for modernizing government and private sector-based payments.

2. How fast was the latest Digital Dirham transaction?

Reports state the government settlement was completed in under two minutes via the mBridge multi-CBDC platform.

3. Is this the first Digital Dirham transaction ever?

It is one of the first domestic government-level transactions under the latest pilot phase. The UAE has previously tested cross-border CBDC payments.

4. Will the Digital Dirham replace cash or bank deposits?

No. Early phases focus solely on payments and settlements, not on savings or interest-bearing functions.

5. How many countries have live CBDCs today?

A few countries, such as the Bahamas, Nigeria, and Jamaica, have launched live CBDCs, while many more, including the UAE, are in pilot stages.