The Central Bank of the United Arab Emirates has released a comprehensive report on the digital dirham, as part of its efforts to introduce a national digital currency aimed at advancing the digital transformation in the country.
The report details significant achievements and provides an in-depth analysis of the developments and ongoing initiatives undertaken by the central bank in research, innovation, and the execution of technical trials, leading to the preparations for the currency’s rollout and its adoption by individuals and businesses both locally and globally.
The report highlights design and policy aspects that have contributed to the digital dirham’s development, ensuring it is secure, reliable, and user-friendly, in line with international best practices set by the International Monetary Fund and the Bank for International Settlements.
Moreover, it emphasizes the strong collaboration between the central bank, the financial sector, and strategic partners to ensure the effective adoption of the digital dirham.
The report reviews the progress and preparations for rolling out the digital dirham for financial transactions involving the public, businesses, and government entities. This initiative aims to enhance financial inclusion by enabling individuals without banking services or those non-resident in the UAE to access financial services. It also seeks to foster innovation in the financial sector, expedite transactions, and increase payment system efficiency through the unique capabilities of the digital dirham, which includes features such as offline transactions and support for smart contracts and cross-border payments.
The central bank is set to issue the “digital dirham” as a digital version of the UAE’s national currency, offering high levels of security and efficiency. It will be usable for a wide array of payments, including online purchases, in-store transactions, and business dealings.
The central bank has developed a comprehensive platform for issuing, trading, and utilizing the digital dirham, which includes a digital dirham wallet that allows individuals and businesses to conduct financial transactions.
His Excellency Khalid Mohamed Balama, Governor of the Central Bank of the UAE, stated, “The digital dirham represents a pioneering initiative by the central bank in shaping the future of finance in the UAE, marking a significant achievement in the global development of central bank digital currencies. The digital dirham will enhance the UAE’s secure and efficient financial infrastructure, improve the efficiency of payment systems, support monetary stability, and broaden financial inclusion, solidifying the global standing of the UAE dirham.”
He added, “We will continue to assess the design and development aspects of the digital dirham to ensure its successful implementation and to achieve its transformative impact through a consistent and thoughtful approach.”
At the beginning of 2023, the central bank launched the digital currency project as part of the financial infrastructure transformation program, a proactive step in response to the growing demands of the digital economy and to bolster confidence in the national currency. The central bank conducted local and cross-border transactions using the digital dirham to evaluate the feasibility and effectiveness in future design work, the technologies employed, and the expected benefits, as well as to identify key use cases in the digital economy.