UAE Executes First Digital Dirham Transaction in Landmark CBDC Pilot

The United Arab Emirates (UAE) has successfully completed its first transaction using the Digital Dirham. This is a significant step in the nation’s central bank digital currency (CBDC) initiative that is set to change the course of the crypto industry in the country. The transaction represents the most significant progress in the project since its official announcement back in March. It positions the UAE at the forefront of digital finance transformation in the Middle East.

According to the joint statement released by the Ministry of Finance and Dubai Finance, the pilot transaction was executed through mBridge. It is a government payment platform designed to facilitate secure and efficient digital statements. The official described the transaction as a “step towards broader adoption of the national digital currency across both government and private sector operations.”

Transaction Completed in Under Two Minutes

Ahmed Ali Meftah, the Executive Director of Central Accounts at Dubai Finance, said the test aimed to evaluate operational readiness and technical integration with the UAE Central Bank’s system. He noted, “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.”

The UAE Central Bank has emphasized that the Digital Dirham rollout will take place in different stages. A July policy paper outlined that the initial phase will focus solely on payments, ensuring the CBDC complements rather than competes with existing banking and savings products. The project’s broader objective is to “future-proof central bank money for the digital era,” aligning with the UAE’s ambition to build a robust digital economy.

Globally, central banks are cautiously exploring digital currencies. While the European Central Bank recently advanced its digital euro initiative, Kyrgyzstan announced its own CBDC plans. According to the Atlantic Council, Nigeria, Jamaica, and the Bahamas have fully launched CBDCs.

Advocates for CBDC argue that digital currencies could reduce transaction costs, expand financial inclusion, and improve payment efficiency. Critics warn of potential privacy concerns and the risk of central banks gaining excessive control over users’ financial data.

As the UAE advances into the next phase of its Digital Dirham pilot, the project’s success could serve as a model for other nations pursuing secure, efficient, and inclusive digital monetary systems.