UAE Makes History With First Government Payment in Digital Dirham

Launched under the wider FIT (Financial Infrastructure Transformation) programme, the Digital Dirham has been in the making for a number of years. According to the policy statement released by the CBUAE, the Digital Dirham shall be available for both wholesale and retail segments, be redeemable at par with the existing dirham, and shall preferably be made available through licensed digital wallets.

Although the value of the transaction was not disclosed, communications from the CBUAE explained that it was a settlement between federal and Dubai government entities. It was completed in under two minutes using the multi-CBDC platform “mBridge”.

The government-level use of the Digital Dirham represents further development from previous retail and cross-border pilots. In January 2024, the UAE concluded a real-value cross-border test payment using the Digital Dirham via mBridge.

According to the CBUAE policy paper: “The Digital Dirham will serve as a digital version of the UAE’s national currency, enabling instant settlements and widespread accessibility with the security and trust of traditional central-bank-backed money.”

The official Central Bank Digital Currency Strategy – The Digital Dirham on the UAE government portal states three major pillars in the programme: the soft launch of mBridge for cross-border payments; proof-of-concept work on bilateral CBDC bridges (for example with India); and domestic CBDC issuance covering both wholesale and retail usage.

The Central Bank of the UAE has indicated that the Digital Dirham aims to enhance efficiency and accessibility across payment systems, potentially enabling new features such as programmable transfers and inclusive digital access.

Therefore, for the UAE government, the adoption of the Digital Dirham in a real government transaction signals a number of strategic benefits: first, by using CBDC as a means for government settlement, the authorities can achieve better traceability, probably at lower cost and faster execution compared to traditional mechanisms; second, it sends a strong signal to the private sector that the currency is operational and ready to be used; third, this aligns with broader policy objectives: financial inclusion, tokenization readiness, strengthening the dirham's role in payments, and overall digital economy ambition.

From an international perspective, the UAE’s step underscores the momentum in the global CBDC race. The UAE is now among a handful of jurisdictions moving from pilots to actual implementation. The integration of the mBridge platform positions the UAE as an early mover in multi-jurisdiction CBDC infrastructure.

For businesses and financial-services partners in the UAE, this development opens new horizons for innovation and efficiency. The Digital Dirham is expected to enable faster settlements, lower remittance costs, programmable payments through smart contracts, and seamless integration with tokenized assets. By embracing these capabilities, firms can strengthen compliance, modernize their digital-wallet infrastructure, and position themselves at the forefront of a rapidly evolving financial ecosystem.

The first use of the Digital Dirham by the government represents a point of transformation in the financial landscape of the UAE. It moves the project from theory and pilots to actual practical application inside the settlement chain of the public sector.

The UAE has definitely taken that crucial step toward realizing its vision of an advanced and fully digital national economy.