United Arab Emirates Unveils New Dirham Symbol and Advances in Digital Currency Program
The Central Bank of the UAE (CBUAE) has unveiled a groundbreaking initiative - the Digital Dirham, a blockchain-based central bank digital currency (CBDC) designed to revolutionise the payment ecosystem in the United Arab Emirates (UAE). As part of the CBUAE's Financial Infrastructure Transformation (FIT) Programme, launched in 2023, the Digital Dirham is poised to transform the nation's financial landscape, aligning with the directives of His Highness Sheikh Mansour bin Zayed Al Nahyan.
The Digital Dirham, a key element of the FIT Programme, is set to offer a plethora of benefits. Available in both retail and wholesale formats, the Digital Dirham will serve individuals, businesses, and government entities, ensuring flexibility and innovation in the UAE's growing digital economy.
Key Features of the Digital Dirham
The Digital Dirham boasts several noteworthy features. It is designed to complement physical cash, existing bank deposits, and enable financial inclusion for the unbanked and non-residents in the UAE. The currency supports multi-use case payments, including in-store purchases, e-commerce, peer-to-peer transfers, commercial settlements, and cross-border transactions.
One of the Digital Dirham's standout features is its offline usability, allowing transactions even without continuous internet connectivity, enhancing usability in diverse contexts. The currency also integrates smart contracts to boost innovation and automation in financial services and facilitates faster and more efficient international payments, as tested in pilot programs.
The Digital Dirham includes comprehensive digital wallets for individuals and businesses to issue, trade, and use the Digital Dirham securely. It adheres to best practices and guidelines from the International Monetary Fund (IMF) and the Bank for International Settlements (BIS), ensuring strong security, privacy, and regulatory compliance.
Advantages of the Digital Dirham
The Digital Dirham offers several advantages, such as tokenization for improved liquidity, smart contracts for automated transactions, and robust security measures to protect user data. It is set for retail issuance in late 2025.
The new currency symbol for the Digital Dirham is inspired by the UAE flag and includes two horizontal lines representing financial stability. A distinct variant features a circular design in the UAE's national colours.
The Impact of the Digital Dirham
According to H.E. Khaled Mohamed Balama, Governor of the CBUAE, the Digital Dirham will enhance payment system efficiency, support monetary stability, expand financial access, and strengthen the UAE Dirham’s international status, reflecting a key strategic initiative in financial sector innovation. The Digital Dirham will function as a secure and efficient blockchain-based payment instrument, backed by Federal Decree-Law No. (54) of 2023.
The Digital Dirham will be accessible through licensed financial institutions and will support various financial activities, including payments, transfers, and redemptions. It is expected to reduce transaction costs and combat financial crime, ultimately contributing to the UAE's status as a global digital payments leader.
In summary, the Digital Dirham is positioned to transform the UAE’s payment ecosystem by leveraging blockchain technology to create a secure, efficient, and inclusive digital currency infrastructure aligned with global best practices and supporting the nation’s digital economy ambitions.
