UAE Completes First Government Transaction Using Digital Dirham
<h3><strong>UAE Makes History with First Government Transaction Using the Digital Dirham</strong></h3><p>The <strong>United Arab Emirates</strong> has successfully completed its <strong>first-ever government financial transaction</strong> using the <strong>Digital Dirham</strong>, signaling a groundbreaking moment in the country’s journey toward a <strong>fully digital economy</strong>. The transaction, carried out between the <strong>Ministry of Finance</strong> and the <strong>Dubai Department of Finance (DOF)</strong> in coordination with the <strong>Central Bank of the UAE (CBUAE)</strong>, highlights the nation’s growing leadership in <strong>digital currency innovation</strong> and <strong>financial technology adoption</strong>.</p><p>This milestone follows the UAE’s earlier success with its <strong>cross-border payment pilot</strong>, where Dh50 million was transferred to China using the same digital currency platform. Together, these developments show that the <strong>Digital Dirham</strong> is moving from experimental stages to real-world implementation across government systems.</p><h3><strong>From Global Pilot to National Implementation</strong></h3><p>The Digital Dirham project forms part of the <strong>CBUAE’s Financial Infrastructure Transformation (FIT) Programme</strong>, which aims to accelerate the adoption of <strong>digital payments</strong>, strengthen <strong>financial inclusion</strong>, and position the UAE as a <strong>global financial hub</strong>.</p><p>The first successful <strong>cross-border payment</strong> using the Digital Dirham took place in <strong>January 2024</strong> via the <strong>mBridge platform</strong>, in collaboration with the <strong>People’s Bank of China</strong>, <strong>Hong Kong Monetary Authority</strong>, and the <strong>Bank of Thailand</strong>, under the <strong>Bank for International Settlements Innovation Hub</strong>. That trial proved that central bank digital currencies (CBDCs) can enable <strong>secure, instantaneous international transactions</strong> without relying on intermediary banks.</p><p>Now, by completing a <strong>domestic government transaction</strong>, the UAE has transitioned from international testing to <strong>nationwide operational use</strong>, setting the stage for broader adoption across both <strong>public</strong> and <strong>private sectors</strong>.</p><h3><strong>A New Phase of Digital Transformation</strong></h3><p><strong>Sheikh Mansour bin Zayed Al Nahyan</strong>, Vice President, Deputy Prime Minister, Chairman of the Presidential Court, and Chairman of the CBUAE, called the Digital Dirham <i>“a strategic pillar in the UAE’s pursuit of an integrated digital economy.”</i></p><p>He emphasized that the first intergovernmental transaction reflects <i>“a high level of integration across national financial systems and advanced digital infrastructure that supports long-term growth and stability.”</i></p><p>Echoing this, <strong>Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum</strong>, First Deputy Ruler of Dubai, Deputy Prime Minister, and Minister of Finance, said the initiative demonstrates <i>“the Ministry of Finance’s commitment to accelerating digital transformation in public finance management while promoting transparency and efficiency.”</i></p><p>He added that using the Digital Dirham strengthens the <strong>integration of the UAE’s national financial ecosystem</strong> and supports the leadership’s vision of building an <strong>innovative and trustworthy digital economy</strong>.</p><h3><strong>Financial Innovation at Work</strong></h3><p><strong>Mohammed Hadi Al Husseini</strong>, Minister of State for Financial Affairs, described the Digital Dirham as <i>“a qualitative leap in the use of financial technology.”</i> He noted that collaboration between the Ministry of Finance, DOF, and CBUAE sets <i>“a pioneering model for corporate and government integration, boosting global confidence in the UAE’s economy.”</i></p><p><strong>Khaled Mohamed Balama</strong>, Governor of the CBUAE, called the achievement <i>“a qualitative milestone in the UAE’s digital transformation journey.”</i> He reaffirmed the Central Bank’s commitment to developing <strong>secure, efficient, and advanced national payment systems</strong> that enhance financial stability and global competitiveness.</p><blockquote><p>“The Central Bank remains committed to developing cutting-edge financial solutions that align with global shifts,” Balama said. “We aim to reinforce the strength and resilience of our national economy while building a globally competitive digital ecosystem.”</p></blockquote><h3><strong>The Technology Behind the Transaction</strong></h3><p>The transaction was conducted through <strong>mBridge</strong>, a <strong>government payment platform</strong> developed by the <strong>CBUAE</strong> to enable settlements using central bank digital currency. Integrated with the <strong>Digital Dirham system</strong>, it allows <strong>direct issuance, receipt, and settlement of payments</strong>—all without intermediaries.</p><p>According to <strong>Ahmed Ali Meftah</strong>, Executive Director of the Central Accounts Sector at the DOF, the pilot transaction was executed in <strong>less than two minutes</strong>, proving the system’s operational readiness and efficiency. He noted that it also confirmed the <strong>technical compatibility between federal and local government systems</strong>, streamlining the financial process.</p><p><strong>Abdulrahman Saleh Al Saleh</strong>, Director General of DOF and Vice Chairman of the CBUAE, expressed gratitude to the UAE’s leadership, stating:</p><blockquote><p>“The successful completion of this transaction reflects the high level of coordination between government entities and the Central Bank. It’s a testament to the UAE’s strong digital infrastructure and forward-thinking approach to financial innovation.”</p></blockquote><h3><strong>Expanding the Digital Dirham’s Reach</strong></h3><p>Initially tested in <strong>international trade</strong>, the mBridge platform is now being used domestically to <strong>reduce transaction time and costs</strong> while ensuring <strong>full transparency</strong>. The move aligns with the UAE’s <strong>Digital Economy Strategy</strong>, which aims to modernize financial systems while maintaining <strong>cybersecurity and regulatory compliance</strong>.</p><p>The <strong>Digital Dirham</strong> is one of the key pillars of the UAE’s <strong>Financial Infrastructure Transformation (FIT) agenda</strong>, alongside:</p><p><strong>Instant payment platforms</strong></p><p><strong>Open finance frameworks</strong></p><p><strong>Digital identity integration</strong></p><p>By linking this domestic transaction to its earlier cross-border pilot, the UAE demonstrates a clear, strategic roadmap — from <strong>global pilot testing to national deployment</strong>. This not only boosts <strong>efficiency</strong> and <strong>security</strong> within the UAE’s financial operations but also strengthens the country’s <strong>international credibility</strong> as a <strong>leader in digital finance innovation</strong>.</p><h3><strong>A Vision for a Fully Digital Economy</strong></h3><p>As <strong>Sheikh Mansour</strong> stated, the Digital Dirham embodies the UAE’s “integrated approach to building a digital economy that champions transparency, innovation, and sustainability.”</p><p>The successful execution of this first government transaction signifies more than just technological progress — it represents a <strong>new era in how the UAE manages money, data, and trust</strong>. With continued investment in <strong>CBDC technology</strong>, the nation is positioning itself at the forefront of <strong>global financial transformation</strong>.</p>