The United Arab Emirates reached a defining moment in its financial evolution on Tuesday, as the first government transaction using the Digital Dirham was successfully executed. Issued by the Central Bank of the UAE, this digital currency represents the country’s most ambitious step yet towards modernising its financial ecosystem. The transaction, carried out via the government payment platform mBridge, was completed in under two minutes, underscoring the efficiency and readiness of the nation’s emerging digital infrastructure.
A milestone in national digital finance
The inaugural transaction, conducted jointly by the Ministry of Finance and the Dubai Department of Finance, forms part of the pilot phase of the Digital Dirham project. Launched under the Central Bank’s Financial Infrastructure Transformation (FIT) Programme and in collaboration with local financial authorities, the initiative is designed to accelerate the adoption of digital payments across both public and private sectors. By embedding next-generation financial technology, the UAE aims to reinforce its position as a global hub for financial innovation and operational excellence.Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister, and Minister of Finance, hailed the transaction as “a pivotal milestone in the history of government financial transformation in the UAE.” In a post on X, he emphasised that the use of the Digital Dirham in government operations reflects a commitment to enhancing transparency, efficiency, and integration within the national financial ecosystem.
Technical execution and strategic significance
The transaction was executed on the mBridge platform, a multi-central bank digital currency settlement system developed by the Central Bank of the UAE. Ahmed Ali Meftah, executive director of the central accounts sector at the Department of Finance, confirmed that the transaction was completed in less than two minutes. While the specific product or service purchased has not been disclosed, the swift settlement demonstrates both the technical maturity of the system and its potential to streamline financial operations between government entities.Sheikh Mansour bin Zayed, Vice President, Deputy Prime Minister, and chairman of the Central Bank, described the Digital Dirham as a “strategic pillar” in the UAE’s ambition to build an integrated digital economy. The successful government-to-government transaction reflects a high degree of technical integration and marks a critical step in establishing a robust infrastructure for future digital payments.
Broader context in digital asset regulation
The Digital Dirham initiative aligns with broader developments in the UAE’s digital-asset strategy. Since March 2023, the Central Bank has required that stablecoins be fully backed by high-quality liquid assets and subject to rigorous auditing. In April, Abu Dhabi-based entities including IHC, ADQ, and First Abu Dhabi Bank announced plans to launch a dirham-backed stablecoin fully regulated by the Central Bank. Experts have highlighted that jurisdictions offering regulatory clarity around digital assets are more likely to attract institutional investment and drive practical adoption, an objective clearly embraced by the UAE.This milestone signals more than a technical achievement; it represents a deliberate effort to position the UAE at the forefront of global financial innovation. By embedding digital currency into the core of government transactions, the nation not only expedites operational efficiency but also establishes a foundation for a secure, transparent, and advanced digital economy.
