The United Arab Emirates made the first transaction using its central bank’s digital currency in the first major update to the project since it was announced in March.
The UAE 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 in both government and private sector operations.”
It is the first major update on the CBDC since the UAE central bank said in March that it expected the digital currency to begin its launch in the fourth quarter of 2025.
The test transaction took less than two minutes
Dubai Finance’s executive director of central accounts, Ahmed Ali Meftah, said the transaction was carried out 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 improving operational efficiency and accelerating financial arrangements between federal and local government entities.”
The launch will be in phases
In a policy paper published in July, the UAE Central Bank said the CBDC is an attempt to future-proof central bank money for the digital age and in response to the changing needs of a digital economy.
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It also indicated that the launch would be done in phases and that the features of CBDCs at launch would be limited to payments only, to avoid competing with savings and other interest-bearing financial products.
CBDCs are a hotly debated topic, with critics concerned that they could infringe on privacy and undermine the financial sector by allowing users to be direct customers of central banks, while proponents argue that CBDCs could improve payments efficiency and expand financial inclusion.
So far, only three CBDCs successfully launched
Many governments have been experimenting with CBDC. In October, Kyrgyzstan confirmed its plans to issue a central bank digital currency, while the European Central Bank decided to move to the next phase of its digital euro project.
However, only three CBDCs have been officially launched, according to the US think tank Atlantic Council.
Its CBDC tracker lists Nigeria, the Bahamas and Jamaica as the only three jurisdictions with an active CBDC token, while 49 other countries are in the pilot phase.
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