UAE Digital Dirham transaction marks the first-ever government CBDC payment in under two minutes using the mBridge platform, boosting digital finance and transparency in the UAE.
UAE Executes First-Ever Digital Dirham Transaction in Record Time
What Happened
On 12 November 2025, the United Arab Emirates (UAE) marked a historic milestone: the first-ever government transaction using the Digital Dirham, completed in under two minutes. The transaction was carried out by the Ministry of Finance and the Dubai Department of Finance, in close coordination with the Central Bank of the UAE (CBUAE).
This pilot payment was executed using the mBridge platform, a settlement system designed for central bank digital currencies (CBDCs) that enables real-time, secure digital transactions. Although officials have not disclosed the exact nature or value of the transaction, they emphasized that the rapid completion reflects strong technical integration and the efficiency of the system.
What Is the Digital Dirham?
The Digital Dirham is a central bank digital currency (CBDC) issued by the CBUAE.Unlike decentralized cryptocurrencies, it’s fully regulated and backed by the UAE government, making it a secure instrument for large-scale financial operations. It is part of the Financial Infrastructure Transformation (FIT) Programme, a broader vision by the UAE to modernize its financial systems, promote transparency, and boost digital payment adoption.
Role of the mBridge Platform
The transaction used the mBridge platform — a multi-central-bank settlement system developed for cross-border and domestic CBDC operations. mBridge was built in collaboration with central banks across Asia and the Middle East, allowing governments to settle payments using their own digital currencies. For the UAE, using mBridge demonstrates readiness for both domestic and potentially cross-border digital transactions.
Regulation & Stability
The Digital Dirham project aligns with the UAE’s cautious and regulated approach toward digital assets. Since March 2023, the Central Bank has enforced rules that stablecoins must be fully backed by high-quality liquid assets and be subject to regular audits. In April 2023, institutions like IHC, ADQ, and First Abu Dhabi Bank proposed a dirham-backed stablecoin, reflecting growing local interest in regulated digital finance tools.
Future Implications
This successful pilot opens the door for a transformed public finance ecosystem in the UAE:
- Faster inter-departmental payment flows
- Automated reconciliation and audit trails
- Reduced dependence on paper-based processes
- Increased transparency in government spending
In the long term, the Digital Dirham may extend beyond government use to retail and commercial sectors, making digital currency a part of everyday transactions.
Why This News Is Important
Strategic Leap in Digital Finance
This first government transaction signals a strategic shift in how the UAE conducts financial operations. The Digital Dirham is not just a tech experiment — it’s central to the country’s ambition to become a world-leading digital finance hub. With such transactions, the UAE is demonstrating its commitment to integrating digital currencies into its core economic infrastructure.
Efficiency & Transparency Boost
Completing a transaction in under two minutes showcases the power of digital currency to streamline government processes, reduce manual overhead, and eliminate bureaucratic delays. This is critical for public administration: faster settlements, better audit trails, and less reliance on traditional cash or bank transfers enhance operational governance.
Regulatory Significance
By deploying a fully regulated CBDC, the UAE is balancing innovation with risk management. This aligns with global trends: central banks worldwide are exploring how to issue their own digital currencies while ensuring financial stability. For students preparing for civil service or banking exams, understanding CBDCs is increasingly relevant.
Foundation for Broader Adoption
This successful pilot could pave the way for use of the Digital Dirham in salaries, subsidies, procurement, and even retail payments. The more the system is used in government, the easier it becomes to scale to citizens and businesses.
Historical Context
Origins of the Digital Dirham
The UAE’s journey toward a CBDC began with its Financial Infrastructure Transformation (FIT) Programme, launched by the Central Bank of the UAE. In earlier phases, the CBUAE conducted pilots for both retail and wholesale use cases, testing functionality such as issuance, redemption, smart contracts, and tokenization.
mBridge & Cross-Border Testing
Before this government transaction, the UAE had already tested the Digital Dirham in cross-border scenarios. In fact, in early 2024, the UAE made a cross-border payment to China using mBridge, demonstrating that CBDCs can facilitate secure, real-time international transfers.
Regulatory Evolution
In March 2023, the CBUAE introduced stricter regulations for stablecoins: issuers must back them fully with high-quality liquid assets and submit to audits. By April of the same year, major Abu Dhabi financial institutions began discussing a dirham-backed stablecoin, signaling strong institutional backing for regulated digital currencies.
Key Takeaways from This News
| S. No. | Key Takeaway |
|---|---|
| 1 | The UAE conducted its first-ever government transaction using the Digital Dirham on 12 Nov 2025. |
| 2 | The transaction was completed in under two minutes using the mBridge settlement platform. |
| 3 | The Digital Dirham is a CBDC issued by the Central Bank of the UAE as part of its Financial Infrastructure Transformation (FIT) Programme. |
| 4 | mBridge is a multi-central-bank digital currency platform that enables real-time, secure CBDC settlements. |
| 5 | This move strengthens the UAE’s push for digital financial infrastructure, enhancing transparency, efficiency, and potentially enabling future public and retail use of the Digital Dirham. |
FAQs: Frequently Asked Questions
1. What is the Digital Dirham?
The Digital Dirham is a central bank digital currency (CBDC) issued by the Central Bank of the UAE (CBUAE). It is government-backed, fully regulated, and designed for secure and efficient digital transactions.
2. When did the UAE conduct its first-ever Digital Dirham transaction?
The UAE executed the first government transaction using the Digital Dirham on 12 November 2025, completing it in under two minutes.
3. Which platform was used for this transaction?
The transaction was conducted using the mBridge platform, a multi-central-bank settlement system that enables real-time CBDC transactions.
4. What are the benefits of the Digital Dirham?
Key benefits include faster settlements, transparency in government payments, reduced dependency on paper-based processes, and the potential to expand into retail and commercial transactions.
5. Is the Digital Dirham a cryptocurrency?
No. Unlike decentralized cryptocurrencies like Bitcoin, the Digital Dirham is a regulated CBDC, fully backed by the UAE government, ensuring stability and compliance with financial regulations.
6. How does the Digital Dirham support the UAE’s digital economy?
It promotes a digital financial ecosystem, enabling faster payments, audit trails, and seamless integration with government and potentially cross-border financial systems.
7. Which government bodies were involved in this transaction?
The Ministry of Finance, Dubai Department of Finance, and Central Bank of UAE coordinated the transaction.
8. Can the Digital Dirham be used for international payments?
Yes. Using platforms like mBridge, the Digital Dirham can potentially support cross-border transactions, enhancing trade and financial connectivity.
Some Important Current Affairs Links
