UAE’s Digital Dirham Pilot Reaches Major Milestone With First Interbank Transaction

The United Arab Emirates has taken a major step forward in its journey toward modernizing money and payments. The UAE Central Bank (CBUAE) has successfully carried out the first interbank transaction using its developing digital currency, known as the digital dirham. This achievement is part of Project Aber, a long-term initiative designed to explore how a digital version of the dirham can help banks settle payments more efficiently and securely.

This early success is important because it shows that the digital dirham can work in real financial scenarios that matter to banks and the broader economy. With global interest in central bank digital currencies increasing, the UAE is positioning itself as a regional leader in digital finance, aiming to provide businesses and financial institutions with modern, reliable payment tools that match the needs of today’s economy.

The pilot’s first major breakthrough came from a smooth and secure transfer between two commercial banks participating in the program. This was not a simulated or theoretical test. It was designed to closely resemble the kinds of real transactions banks handle every day, such as moving funds to manage liquidity or settling obligations with other institutions.

Dubai Finance’s executive director of central accounts, Ahmed Ali Meftah, said the transaction was done to check whether everything works smoothly and to make sure their systems connect properly with the Central Bank’s technology.

“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.”

CBUAE wants to upgrade its payment systems so they can easily work with future tokenized assets and other digital platforms. This is part of the country’s push to stay ahead in modern financial technology. The Digital Dirham, the UAE’s Central Bank Digital Currency (CBDC), will be used for both large transactions between banks (wholesale) and everyday payments by people and businesses (retail).

The project is a major part of the CBUAE’s Financial Infrastructure Transformation (FIT) program, which aims to position the UAE as a global financial leader. CBUAE has partnered with technology provider R3, which is known for its Corda platform, for the implementation of its central bank digital currency (CBDC). G42 Cloud is the infrastructure provider. The use blockchain technology is to make payments safer, faster, and possibly cheaper. It will also rely on smart contracts, automated programs that complete transactions on their own to boost efficiency. Overall, the goal is to improve financial access for everyone and help move the country toward a more digital, cashless economy.

Why the UAE Is Introducing a Digital Dirham

In a policy paper released in July, the UAE Central Bank explained that the Digital Dirham (CBDC) is designed to prepare the country’s money system for the digital future. As the economy becomes more tech-driven, the Central Bank wants to ensure its currency stays relevant and useful. The rollout of the CBDC will happen in stages. At first, the Digital Dirham will only be used for payments. This careful approach ensures it won’t compete with bank accounts, savings products, or interest-earning services offered by financial institutions.

CBDCs around the world are a major topic of debate. Some people worry they could affect privacy or weaken the traditional banking sector by letting citizens hold money directly with a central bank. Others believe CBDCs can make payments faster, safer, and more inclusive especially for people who lack access to regular banking. The UAE’s phased approach aims to balance innovation with safety, giving the country time to build trust and refine the technology while protecting the financial system.

The UAE’s first successful interbank transfer using the Digital Dirham shows that the country is ready to take the lead in modern digital money for banks and large institutions. With advanced technology, strong support from its banking partners, and a clear long-term plan, the UAE is beginning a new chapter where payments can become faster, safer, and more efficient.

As the project grows, the Digital Dirham could change how banks send money to each other, how funds move across different countries, and how the entire region adopts a more connected and digital financial system.