UAE’s ‘digital dirham’ CBDC pilot completes first transaction

The United Arab Emirates has made the first transaction with its central bank digital currency in the first major update to the project since it was announced in March.

The United Arab Emirates’ Ministry of Finance and Dubai Finance said on Tuesday that the transaction was part of the pilot phase of the Digital Dirham project and used the government payment platform mBridge.

The agencies said the transaction was a first for the UAE government and was a “step towards broader adoption of the national digital currency across both government and private sector operations.”

It’s the first major update on the CBDC since the UAE’s central bank said in March that it expected the digital currency would begin its rollout in the fourth quarter of 2025.

Test transaction took under two minutes

Dubai Finance’s executive director of central accounts, Ahmed Ali Meftah, said the transaction was conducted to “test operational readiness and ensure seamless technical integration with the Central Bank’s systems.”

“The transaction was completed in less than two minutes, underscoring its goal of enhancing operational efficiency and expediting financial settlements between federal and local government entities.”

Rollout will be in phases

In a policy paper released in July, the UAE Central Bank said the CBDC is an attempt to future-proof central bank money for the digital era, and in response to the evolving needs of a digital economy.

Related: Italian banks back digital euro but urge ECB to spread out costs: Reuters

It also indicated that the rollout would be in phases, with the CBDCs features at launch limited to payments only, to avoid competing with savings and other interest-earning financial products.