The Central Bank of the UAE announced it will launch its Digital Dirham central bank digital currency (CBDC) in the fourth quarter of this year. That’s when it plans to launch the retail version of the CBDC, which will be treated as legal tender, requiring people to accept it for payment. The central bank also intends to use the CBDC for wholesale and cross border payment purposes.
Alongside the launch of the digital currency, it will also make a Digital Dirham wallet available. While others such as Europe are focused on CBDC for everyday transactions, the central bank clearly has its sights on financial use cases.
Hence, the blockchain-based CBDC will be distributed via banks, exchanges, finance companies and fintechs. It views the fractionalization enabled by tokenization as “enhancing financial inclusion”. Programmability through the use of smart contracts will support the automation of complex transactions as well as atomic settlement.
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