UAE conducts first government transaction using Digital Dirham

Dubai: The UAE has completed its first government financial transaction using the Digital Dirham, marking a major milestone in the country’s push toward a fully digital economy. The move builds on an earlier cross-border pilot that saw the UAE successfully transfer Dh50 million to China using the same platform.

The Ministry of Finance and the Dubai Department of Finance (DOF) carried out the transaction in collaboration with the Central Bank of the UAE (CBUAE). Officials said it represents the next phase of integrating the Digital Dirham into national financial operations, reinforcing the UAE’s leadership in advanced financial technologies.

The transaction is part of the pilot phase of the Digital Dirham project, launched under the CBUAE’s Financial Infrastructure Transformation (FIT) Programme. The programme aims to accelerate the adoption of digital payments, promote financial inclusion, and strengthen the UAE’s position as a global financial hub.

In January 2024, the UAE had completed its first cross-border payment using the Digital Dirham through the mBridge platform, transferring funds directly to China. That pilot—conducted jointly with the People’s Bank of China, the Hong Kong Monetary Authority, and the Bank of Thailand, under the Bank for International Settlements Innovation Hub—proved the feasibility of using central bank digital currencies (CBDCs) for secure, instant cross-border settlements.

Officials said the latest government-to-government transaction reflects the UAE’s transition from international testing to domestic implementation, paving the way for wider adoption across both public and private sectors.

Sheikh Mansour bin Zayed Al Nahyan, Vice President, Deputy Prime Minister, Chairman of the Presidential Court and Chairman of the CBUAE, said the Digital Dirham “represents a strategic pillar in the UAE’s pursuit of establishing an integrated digital economy and embodies the vision of the wise leadership in consolidating the UAE’s position as a global financial hub.”

He said the first government transaction between the federal and Dubai governments “demonstrates the high level of integration across national financial systems and the advanced technical infrastructure supporting sustainable financial growth and macroeconomic stability.”

Echoing this view, Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister, and Minister of Finance, said using the Digital Dirham “reflects the Ministry of Finance’s commitment to accelerating digital transformation in public finance management and enhancing transparency and efficiency in government financial systems.”

He added that the initiative “reinforces the integration of the national financial ecosystem and aligns with the UAE leadership’s vision of building an advanced, innovative, and trustworthy digital national economy.”

Mohammed Hadi Al Husseini, Minister of State for Financial Affairs, called the use of the Digital Dirham “a qualitative shift in leveraging financial technology, creating an opportunity to develop government and private payments.” He said the collaboration with the CBUAE “serves as a pioneering model of corporate integration and enhances global confidence in the UAE’s economic system.”

The Governor of the CBUAE, Khaled Mohamed Balama, said the pilot marks “a qualitative milestone in the UAE’s digital transformation.” He said it demonstrates the country’s commitment “to advancing national payment systems, strengthening financial stability, enhancing the financial ecosystem and consolidating its global leadership in financial innovation.”

Balama added: “The Central Bank remains committed to collaborating with strategic partners to develop cutting-edge financial solutions that align with global shifts, reinforce the strength and stability of the national economy, and help build a globally competitive digital economy.”

The transaction was executed through mBridge, a government payments platform developed by the CBUAE to enable settlements using central bank digital currency. Integrated with the Digital Dirham system, it allows direct issuance, receipt, and settlement of government payments—without intermediaries.

Ahmed Ali Meftah, Executive Director of the Central Accounts Sector at DOF, said the pilot transaction was conducted through mBridge “to test operational readiness and ensure seamless technical integration with the Central Bank’s systems.” He added that “the transaction was completed in less than two minutes, underscoring its goal of enhancing operational efficiency and expediting financial settlements between federal and local government entities.”

Abdulrahman Saleh Al Saleh, Director General of DOF and Vice Chairman of the CBUAE, said: “We are grateful to the UAE leadership for its commitment to consistently adopting cutting-edge financial technologies in business and digital finance. The successful execution of the first government transaction using the Digital Dirham reflects the high level of integration among the country’s financial systems, the ongoing coordination with the Central Bank, and the advanced digital infrastructure that supports collective efforts to build a fully integrated national economy.”

The mBridge platform was first tested internationally and is now being deployed domestically to support faster, lower-cost, and more transparent settlements. Officials say it aligns with the UAE’s digital economy strategy, designed to modernise financial infrastructure while ensuring regulatory integrity and cyber-resilience.

The Digital Dirham is also a key component of the UAE’s broader Financial Infrastructure Transformation agenda, which includes instant payment platforms, open finance frameworks, and enhanced digital identity systems.

By linking the government transaction to its earlier cross-border pilot, the UAE is signalling a steady trajectory for its digital currency—from international proof-of-concept to operational use in public finance. Officials say this strengthens both internal efficiency and global connectivity, advancing the country’s goal of becoming a leading centre for financial innovation.

As Sheikh Mansour noted, the initiative underscores the UAE’s “integrated approach to building a digital economy” that promotes transparency, efficiency, and long-term financial sustainability.