Everything You Must Know About UAE’s Central Bank Digital Currency (CBDC)

According to the latest CBDC tracking data, 146 countries and currency unions, representing more than 98% of global GDP, are exploring central bank digital currencies (CBDCs). The Bahamas, Jamaica, and Nigeria are among the countries that have successfully launched CBDCs. The Eastern Caribbean Currency Union (ECCU) remains in the experimental phase of CBDC development. Its digital currency, DCash, was launched by the Eastern Caribbean Central Bank in 2021 and made available across the union’s eight member states.

However, the project was later suspended and has since been discontinued. The ECCB has instead shifted its focus toward developing a regional Fast Payment System and strengthening CARICOM (Caribbean Community) financial integration, prioritizing practical improvements to cross border payments and banking infrastructure over a standalone digital currency initiative.

CBDC development continues to accelerate globally, with most major economies advancing research, development, and pilot programs. However, the United States has emerged as a notable exception, shifting its focus away from a retail CBDC and toward regulating private stablecoins and exploring wholesale digital payment infrastructure.

As of 2026, most G20 economies remain engaged in CBDC exploration, although the United States has shifted its focus away from pursuing a retail CBDC. Major economies such as China, India, and the Euro area have already advanced to pilot programs, while countries including Germany, Mexico, and the United Kingdom continue to develop their CBDC initiatives through ongoing research and development efforts.

So, what are CBDCs and how can they benefit economies? In this article, we explore CBDCs in detail and examine the UAE’s Digital Dirham initiative, which forms part of the country’s broader digital currency strategy.

What is a Central Bank Digital Currency (CBDC)?

A Central Bank Digital Currency (CBDC) is a digital form of a country’s official currency that is issued and regulated by its central bank. It has the same value as physical money and can be used as legal tender for payments and transactions.

CBDCs combine the trust and stability of government-issued currency with the convenience of digital payments. While their design varies from country to country, they are generally being developed to support digital transactions alongside existing forms of money, including cash.

What is the Difference Between a CBDC and Cryptocurrency?

Cryptocurrencies run on decentralized blockchain technology which means that it’s not regulated by one central hub but rather by multiple hubs all over the world. This means that owners have direct access to the coins, CBDCs, on the other hand, exist under the central bank’s authority. This means that owners can access it through a centralized authority. 

While dealing with popular cryptocurrencies like Bitcoin, you need to use a wallet address for the transaction. This means that you can remain anonymous and do not need to reveal any personal information. But in the case of CBDCs, this anonymity is not possible since your details are attached to your CBDC asset. All the crypto transactions are available to the public while in the case of CBDCs, only the sender, receiver and the bank can access the transaction details.

What are the two Primary Types of CBDC’s?

CBDCs are generally classified into two categories: Wholesale CBDCs and Retail CBDCs.

1. Wholesale CBDC

Wholesale CBDCs are designed for use by financial institutions such as banks and payment service providers. They are primarily used for interbank settlements, fund transfers, and other financial transactions conducted within the banking system. In this model, the central bank provides participating institutions with access to digital central bank money for settlement purposes.

2. Retail CBDC

Retail CBDCs are intended for consumers and businesses. Similar to physical cash, they can be used for everyday payments and transactions. Retail CBDCs may be accessed through digital wallets or through accounts provided by authorized financial institutions.

While countries such as Tunisia remain in the early research and experimental stages of CBDC exploration, having conducted limited studies and discussions around digital currencies, other regions have progressed much further into live wholesale CBDC pilots aimed at improving cross border payments and institutional settlement systems. Austria has conducted research focused wholesale CBDC experiments under the DELPHI initiative, while the Euro area remains in the experimental phase of CBDC development.

Some countries are also exploring both wholesale and retail CBDC models simultaneously. India, China, Australia, Brazil, and the UAE are among those evaluating or piloting initiatives that cover both use cases.

Potential Benefits of Adopting CBDCs

CBDCs have many characteristics that make implementing this currency format immensely beneficial. 

• They have reduced transaction costs and hence are more effective than physical currency.

• As central bank-issued digital currencies, CBDCs can incorporate security measures designed to help protect payment systems and users from potential cyber threats.

• They support financial inclusion making it easy and convenient for everyone to access money on their phone with or without bank accounts. 

• They can make monetary policy flow swift and easy. 

• They enhance the efficiency of digital payment systems with fast and low-cost exchange mediums. 

• They improve transparency in transaction tracking making it easy to limit illicit activities. 

Challenges of CBDCs

Some countries like Ecuador and Denmark have discontinued their plans to implement CBDCs due to the various drawbacks the idea poses. Some common challenges that countries may have to address with implementing CBDCs are:

• It can impact the entire financial structure of a country and create drastic changes in areas like investments, interest rates, banking reserves, etc. 

• Privacy is a major area of concern when it comes to digital currencies. Authorities will need to implement robust security measures, including real-time threat monitoring and strong cryptographic safeguards, to help mitigate risks such as system penetration, fraud, and state-sponsored cyber thefts.

• The bank structure of a country may be upset because there are chances of deposits being transferred from commercial banks to central banks. 

• Commercial banks may experience a loss of income if deposits shift away from the traditional banking system. This could reduce their access to a stable source of funding and increase reliance on alternative funding channels, potentially raising costs and exposing them to external market and currency risks.

• Banks may be forced to offer aggressively high interest rates to attract and retain depositors. While this can benefit savers in the short term, it also increases banks’ funding and operating costs, potentially leading to more expensive loans, mortgages, and other forms of credit across the economy.

CBDC Status in Different Countries – Key Findings

According to the IMF, nearly 130 countries are planning to develop CBDC and some of them have already launched it. 

Countries that launched CBDCs

So far, 11 countries have launched CBDC successfully, and they are:

• Nigeria:  In October 2021, Nigeria launched eNaira for in-store contactless payments and money transfers.

• The Bahamas: Sand Dollar- the world’s first CBDC to cover an entire country was launched by the Central Bank of the Bahamas in October 2020.

• Jamaica:  JAM-DEX (Jamaica Digital Exchange), Jamaica’s central bank digital currency, was legalized by the Bank of Jamaica in June 2022. The currency entered its pilot phase in 2021 before being rolled out for public use.

• Eastern Caribbean Currency Union (ECCU): The eight member states of the ECCU share a single CBDC known as DCash, which is issued by the Eastern Caribbean Central Bank (ECCB). Unlike other CBDC initiatives, these countries do not operate separate national digital currencies. DCash was launched across the union as a shared digital payment system but has since been suspended while the ECCB evaluates future digital payment initiatives.

Countries where CBDCs are in the Development / Testing / Research stage

Below are countries that are still evaluating CBDCs:

• Russia: Russia has moved beyond the evaluation stage and is now implementing a phased national rollout of the Digital Ruble. The Central Bank of Russia has mandated that major systemically important banks and large retailers integrate and accept the Digital Ruble for public use by September 1, 2026, marking a significant step in the country’s CBDC deployment strategy.

• Sweden: Sweden’s E-krona project has progressed beyond laboratory research and is now testing simulated offline transactions and commercial bank integration as part of its ongoing evaluation of a potential CBDC.

• Mexico: Rather than pursuing a retail CBDC rollout, Banco de México has shifted its focus toward expanding DiMo (Dinero Móvil), an instant mobile payment system that enables users to transfer money using phone numbers through existing banking infrastructure.

• Pakistan: Pakistan has continued to explore CBDC development, but political changes and economic adjustments have delayed its previously announced timeline for implementation.

• Ukraine:  A two-month pilot run for e-hryvnia was successfully completed by the National Bank of Ukraine in February 2019.

• South Africa:  Project Khokha initially explored the use of blockchain and tokenized money for wholesale financial settlements. Building on these findings, the South African Reserve Bank (SARB) continues to evaluate digital currency and distributed ledger technologies while advancing payment initiatives such as PayShap and the Payments Ecosystem Modernisation (PEM) programme to improve the country’s payments infrastructure.

• South Korea: South Korea has progressed beyond simulated testing and into real-world CBDC trials involving commercial banks and consumers. Research on CBDC adoption indicates that a digital currency could be preferred over cash and mobile payment methods when offered at no cost or with incentives, although credit and debit cards remain the preferred payment option overall.

• Hong Kong: The Hong Kong Monetary Authority (HKMA) continues to explore CBDC development through its participation in the e-CNY initiative with the People’s Bank of China. Alongside these efforts, Hong Kong’s Faster Payment System (FPS) enables instant transfers between banks and payment service providers, supporting the region’s broader digital payments ecosystem.

• Thailand: Thailand has expanded its CBDC initiatives beyond its retail pilot programme. Alongside wholesale CBDC research, the Bank of Thailand continues to explore digital payment innovation, including programmable payment solutions and regulated digital asset frameworks.

• Malaysia:  Bank Negara Malaysia continues to explore CBDC development through international initiatives such as Project Dunbar, a collaborative project led by the Bank for International Settlements (BIS) that examines the use of CBDCs for cross-border and international settlements.

• Singapore: In 2019, Singapore and Canada completed the world’s first successful cross-border CBDC transaction. Building on these efforts, the Monetary Authority of Singapore (MAS) launched Project Ubin+ and later advanced its Orchid Blueprint initiative. Under the Orchid Blueprint, MAS conducted live pilots for the issuance and automated settlement of wholesale central bank money, helping build the infrastructure required to support instant interbank payments, tokenized bank deposits, and regulated stablecoins.

• Canada: The Bank of Canada continues to study the potential role of a CBDC, but its focus has shifted toward assessing the evolving payments landscape and understanding how Canadians use digital payment methods. The central bank has scaled back active CBDC development while maintaining research efforts to support future policy decisions.

• Haiti: Haiti’s Digital Gourde remains under development according to CBDC tracking data. In recent years, attention has increasingly shifted toward strengthening digital infrastructure and connectivity through initiatives such as the World Bank’s Haiti Digital Acceleration Project, which aims to improve the country’s digital foundations.

• Venezuela: Venezuela launched Petro in 2018, but the project is no longer active. The Digital Bolívar, introduced in 2021 as part of the country’s currency modernization efforts, remains in circulation.

• Brazil: Brazil’s CBDC initiative, known as DREX, has progressed beyond the pilot stage but has not yet been publicly launched. Navigating strict privacy regulations and technical design hurdles has pushed back the schedule, leading to a phased rollout planned for 2025 and 2026.

• Switzerland: Project Helvetia, the Swiss National Bank’s wholesale CBDC initiative, has progressed beyond its initial trial phase and remains an active programme. Conducted in collaboration with SIX Digital Exchange (SDX), the project utilizes distributed ledger technology (DLT) for the settlement of tokenized assets using wholesale central bank money. To support further evaluation and testing of new use cases, the pilot has been officially extended and is expected to continue until at least mid-2028.

• Euro Area: The Digital Euro project has advanced beyond its initial investigation stage and is currently in an active preparation phase. The Eurosystem continues to evaluate the design, functionality, and technical infrastructure required for a potential retail CBDC. Alongside this initiative, Project Stella was conducted as a joint research project between the European Central Bank (ECB) and the Bank of Japan, exploring how distributed ledger technology (DLT) could optimize financial market infrastructure and cross-border transactions, while complementing the Euro-system’s ongoing testing of token-based models designed to support future digital integration and potential digital euro implementation

• Turkey: Turkey has continued to advance its Digital Turkish Lira project following the successful completion of the first phase of testing, which included the country’s first digital lira transaction in December 2022. Subsequent phases have focused on expanding testing scenarios, evaluating system performance, and exploring potential use cases to support the continued development of the digital currency.

• Lebanon: A digital currency launch was previously expected in 2021, but no significant progress has been reported since then. As of 2026, Lebanon’s digital currency initiative remains inactive, while the country’s fintech ecosystem continues to face challenges related to infrastructure, trust, and broader economic conditions.

• Israel: In June 2021, the Bank of Israel announced that a preliminary pilot test of the Digital Shekel had been conducted. Since then, the project has advanced significantly. In March 2025, the Bank of Israel published a preliminary design for the Digital Shekel and established a two-year work plan aimed at supporting a final decision on potential issuance by the end of 2026.

• Bahrain: Bahrain’s cross-border digital currency initiative has progressed beyond the pilot stage into a live, real-time corporate payment service. Developed through collaboration between the Central Bank of Bahrain, J.P. Morgan, and Bank ABC, the platform enables instant cross-border payments using blockchain technology, helping improve the speed and efficiency of international transactions.

• Cambodia:  The National Bank of Cambodia launched Bakong in October 2020 as a distributed ledger technology (DLT)-based payment system. Since then, Bakong has played a significant role in accelerating digital payments, improving financial inclusion, and supporting the country’s broader digital transformation, making it one of the most successful digital payment initiatives in the region.

• United States: On March 9, 2022, President Joe Biden signed Executive Order 14067, which directed federal agencies to assess the opportunities and risks associated with digital assets and a potential U.S. CBDC.Since then, U.S. strategy has pivoted away from a retail CBDC, focusing instead on the regulatory formalization of private stablecoins under the GENIUS Act. This approach leverages tokenized bank deposits and modernized central bank infrastructure to enhance the efficiency of interbank settlement and strengthen the resiliency of cross-border payment systems.

• Belize: The proposed NBB Pay platform was not a CBDC initiative. Instead, it was designed as a commercial, bank-led e-wallet that enables digital transfers and merchant QR code payments using traditional bank deposits rather than a digital version of sovereign currency. While NBB Pay supports digital payments, it is not a central bank digital currency. As of 2026, Belize’s CBDC programme remains inactive.

• Honduras: Banco Central de Honduras announced research plans on digital currency in June 2021.

• Trinidad and Tobago: The Central Bank of Trinidad and Tobago (CBTT) initially granted provisional registration to Telecommunication Services of Trinidad and Tobago (TSTT) and PESH Money Limited (PESH) to issue electronic money (e-money) under its regulatory framework. Following the provisional period, the CBTT granted full registration to both entities on September 1, 2023, moving them beyond the initial trial phase and into standard regulatory compliance.

• Ukraine-While initial development blueprints targeted an operational launch of the e-hryvnia, technical adjustments shifted the testing framework toward an open architecture. The upcoming pilot will allow commercial banking institutions and fin-tech providers to distribute and test the tokenized currency through mobile applications, helping evaluate its functionality and real-world use cases.

• South Africa- In April 2023, the South African Reserve Bank (SARB) announced that it was experimenting with digital currencies and distributed ledger technology (DLT). The central bank also launched Project Khokha 2, which examined the use of tokenized money, digital currency, and blockchain technology.Since then, SARB leadership has confirmed ongoing experimentation with distributed ledger technology (DLT) frameworks.

While the Bank maintains an open mind regarding decentralized technologies, its immediate strategic priority is to strengthen the efficiency and resilience of high-value interbank clearing and settlement systems through modernized, scalable institutional infrastructure.

• South Korea-The Bank of Korea (BOK) has advanced its digital currency initiatives beyond simulated testing environments and into live, real-world trials. The BOK has integrated its technical framework with 10 major commercial banks to evaluate cross-institution interoperability, core system compatibility, and the use of digital currency for retail payments and remittances under real operating conditions.

• Malaysia– Bank Negara Malaysia joined Project Dunbar led by BIS in September 2021 to test the use of CBDC in international settlements. Along with Project Dunbar, BNM is also planning to explore wholesale domestic CBDC in 2022 and retail CBDC by 2024.

• Singapore-Through their domestic digital currency projects-Project Ubin and Project Jasper—the Monetary Authority of Singapore (MAS) and the Bank of Canada successfully executed the world’s first cross-border, cross-currency transaction using central bank digital currencies. By leveraging Hashed Time-Locked Contracts (HTLCs), the transaction was completed without relying on a trusted third-party intermediary. Building on these efforts, MAS later launched Project Ubin+ to further explore cross-border foreign exchange settlement using wholesale CBDCs.

• Canada- In 2023, the Bank of Canada published research highlighting the importance of offline payment functionality in CBDCs. The study emphasized that secure hardware and universal access devices play a critical role in balancing user privacy, accessibility, and fraud prevention within a digital currency ecosystem.

• Brazil-Brazil’s CBDC initiative, known as DREX, has advanced beyond its initial pilot phase and remains under active development. The project is designed to support tokenized financial services, programmable payments, and digital asset transactions within a regulated environment. Ongoing testing and technical refinements are focused on addressing privacy, security, and interoperability requirements before broader implementation.

• Japan-The Bank of Japan has progressed beyond technical feasibility testing of the Digital Yen and is now evaluating the broader framework required for potential implementation. Following proof-of-concept studies and pilot testing, the focus has shifted toward assessing operational requirements, institutional readiness, and the role a CBDC could play within Japan’s future payment ecosystem. A final decision on issuance has not yet been made.

• Kazakhstan– Kazakhstan has emerged as one of the leading CBDC adopters through its Digital Tenge initiative. Following pilot programmes and real-world testing, the National Bank of Kazakhstan has continued expanding the use of the Digital Tenge across payments and financial services. The project remains one of the most advanced CBDC initiatives globally, with ongoing efforts focused on broader adoption and integration within the country’s financial ecosystem.

• Laos- The Digital Lao Kip (DLak) has progressed beyond the prototype stage and continues to be evaluated through pilot programmes designed to support digital payments and financial inclusion. The initiative forms part of the country’s broader effort to modernize its payment infrastructure through central bank-backed digital currency technology.

• Russia- The Digital Ruble has transitioned from pilot testing into a broader implementation phase, with a nationwide rollout scheduled to begin on September 1, 2026. This phase will require Russia’s systemically important banks and major retailers to integrate the platform, enabling the Digital Ruble to function alongside cash and traditional bank deposits as a third form of national currency.

• Turkey- The Central Bank of the Republic of Türkiye successfully completed the first phase of its Digital Turkish Lira project, including the country’s first digital lira payment transaction in December 2022. Building on these results, the second phase expanded testing scenarios and technical evaluations as authorities continued assessing the potential rollout of a CBDC.

• Philippines-The Bangko Sentral ng Pilipinas (BSP) launched its wholesale CBDC initiative, Project Agila, to evaluate the use of digital currency for interbank settlements. The testing phase, which involved six major commercial banks, successfully concluded in December 2024, completing its proof-of-concept for 24/7 interbank settlement using wholesale CBDC technology.

• United States-On March 9, 2022, President Joe Biden signed Executive Order 14067, Ensuring Responsible Development of Digital Assets, directing federal agencies to assess the opportunities and risks associated with digital assets and a potential U.S. CBDC. While the order accelerated research into digital currencies, U.S. policy discussions have increasingly shifted away from a consumer retail CBDC. Current federal strategy is instead focused on supporting domestic financial innovation through privately issued, dollar-backed stablecoins while maintaining the sovereignty and global role of the U.S. dollar within public blockchain ecosystems.

Let us further explore the development plans of CBDC in some other countries:

India Digital Rupee (e₹) 

In the Union Budget 2022, India’s Finance Minister Nirmala Sitharaman announced plans to introduce a Central Bank Digital Currency (CBDC). Following this announcement, the Reserve Bank of India (RBI) launched pilot programmes for the Digital Rupee (e₹) in 2022 to evaluate its use across retail and wholesale payment systems.

Since then, India has progressed beyond the initial testing phases and is now considered one of the global front-runners in real-world CBDC functionality. The RBI has expanded its pilot programmes across multiple cities and use cases while continuing to assess the role of the Digital Rupee in supporting a more efficient and accessible digital payments ecosystem. To support CBDC implementation and broader financial innovation, the RBI established a dedicated Fintech Department to oversee digital currency initiatives and related technology projects.

To advance cross-border payments, the RBI has signed a digital assets cooperation agreement with the Monetary Authority of Singapore (MAS) and is exploring cross-border CBDC pilot projects with Singapore and the United Arab Emirates (UAE). These initiatives are aimed at improving the speed, efficiency, and interoperability of international payments using digital currencies.

China’s Digital Currency Roll Out

China leads the global development of central bank digital currencies through its Digital Yuan (e-CNY) initiative. Having progressed far beyond its initial research and testing phase, the e-CNY entered a significant new operational stage on January 1, 2026. Under this framework, the e-CNY has evolved from a cash-like instrument (M0) into a digital deposit currency, with wallet balances recognized as interest-bearing bank liabilities. This transition is supported by an integrated banking infrastructure that incorporates features such as deposit insurance and reserve requirements. China is also expanding the e-CNY’s role in cross-border payments through the Cross-border e-CNY Transfer Services (CBETS) platform, positioning the digital currency as a strategic settlement mechanism for international trade and financial transactions.

China has also accelerated efforts to support cross-border digital currency transactions. As part of this strategy, the country has onboarded an initial group of 26 domestic and international financial institutions to its integrated cross-border digital yuan payment platform. The initiative represents a significant step toward expanding the use of the e-CNY in international payments and strengthening the broader ecosystem surrounding China’s digital currency.

UAE’s Stake in CBDC

The UAE Central Bank (CBUAE) has positioned central bank digital currency development as a key component of its 2023–2026 strategy, which aims to place the institution among the world’s top 10 central banks. As part of this vision, the CBUAE launched the Financial Infrastructure Transformation (FIT) Programme, a broad initiative designed to accelerate digital transformation across the financial services sector and support the objectives of the ‘We the UAE 2031’ vision.

A core pillar of the FIT Programme is the Digital Dirham, the UAE’s official central bank digital currency (CBDC). The initiative is designed to strengthen the country’s digital payments ecosystem, enhance financial infrastructure, and support secure and efficient domestic and cross-border transactions.

The UAE has continued to advance the Digital Dirham through pilot programmes, strategic partnerships, and infrastructure development initiatives. In 2025, the CBUAE published a comprehensive progress report outlining the milestones achieved toward the issuance of the Digital Dirham, highlighting the country’s commitment to building a future-ready digital financial ecosystem.

Timeline of the UAE’ s CBDC Launch

The UAE has been actively involved in central bank digital currency (CBDC) development for several years. In 2019, the Central Bank of the UAE (CBUAE) partnered with the Saudi Central Bank on Project Aber, a cross-border payment initiative that demonstrated how distributed ledger technology (DLT) could be used to facilitate efficient cross-border transactions using central bank-issued digital money.

Momentum for CBDC development increased following the G20 roadmap for enhancing cross-border payments, which was endorsed during Saudi Arabia’s presidency in October 2020. The roadmap called for central banks to explore digital currency designs and evaluate their potential role in improving the speed, cost, transparency, and accessibility of international payments.

In 2021, the CBUAE joined the mBridge project alongside the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, and the Bank for International Settlements (BIS). The initiative was established to test the use of multiple central bank digital currencies for cross-border transactions through a shared distributed ledger platform.

A major milestone was reached in 2022 when the UAE successfully completed its first real-value cross-border CBDC pilot through the mBridge project. The initiative continued to expand, and in 2024, Saudi Arabia officially joined the platform, further strengthening its role as a multi-country CBDC network.

The mBridge platform later became a key initiative under the CBUAE’s Financial Infrastructure Transformation (FIT) Programme, which aims to accelerate the digital transformation of the UAE’s financial services sector. Built on distributed ledger technology, mBridge is designed to connect participating economies through a multi-CBDC platform that enables faster, lower-cost, and more efficient cross-border payments settled in central bank money.

A landmark achievement followed when His Highness Sheikh Mansour bin Zayed Al Nahyan, Vice President, Deputy Prime Minister, Chairman of the Presidential Court, and Chairman of the Board of the Central Bank of the UAE, conducted the UAE’s first cross-border Digital Dirham payment to China through the mBridge platform. The transaction demonstrated the practical use of CBDCs for international payments and highlighted the growing maturity of the UAE’s digital currency infrastructure.

The UAE’s broader CBDC strategy was formally launched as part of the CBUAE’s 2023–2026 roadmap, which seeks to promote digital transformation across the financial sector. Beyond CBDCs, the strategy supports initiatives involving digital identity, artificial intelligence, and machine learning to strengthen financial services, supervision, and consumer protection.

As a core component of this strategy, the CBUAE launched the Digital Dirham initiative and appointed G42 and R3 as technology and infrastructure partners. The Digital Dirham is one of the key pillars of the FIT Programme and is intended to support both domestic and cross-border digital payments.

The first phase of implementation focused on launching mBridge, developing bilateral CBDC bridges with countries such as India, and conducting proof-of-concept work for wholesale and retail CBDC use cases. The CBUAE also worked with government entities and ministries to establish the legal and regulatory framework required to issue and distribute the Digital Dirham with full legal certainty.

The CBUAE is now progressing toward the next phase of implementation, which includes domestic CBDC payments and further enhancements to cross-border payment capabilities. Looking ahead, the central bank aims to ensure that the UAE’s payment infrastructure is prepared for a future tokenized economy, supporting the tokenization of both financial and non-financial assets.

With full integration targeted by 2026, the FIT Programme supports the objectives of the ‘We the UAE 2031’ vision and the country’s National Digital Economy Strategy. Through these initiatives, the UAE continues to strengthen its position as a global leader in digital finance, innovation, and next-generation payment infrastructure.

The Future of CBDC: The Next Frontier of Global Finance

Central bank digital currencies are rapidly evolving from pilot projects into real-world financial infrastructure. As of 2026, several countries have already launched CBDCs, while many others continue to advance through pilot programmes, development initiatives, and large-scale testing. As adoption grows, CBDCs are expected to play an increasingly important role in domestic payments, cross-border transactions, and financial inclusion.

Has the UAE adopted CBDC?

Yes. The UAE has moved beyond research and pilot programmes and has formally integrated its CBDC strategy into law. Under the Central Bank Law (CB Law 2025), the UAE officially recognized the Digital Dirham as legal tender. This marks the transition from pilot programmes to formal implementation of the Digital Dirham.

Looking ahead, the Bank for International Settlements (BIS) projects that 24 CBDCs could be in circulation globally by 2030, comprising 15 retail CBDCs for public use and 9 wholesale CBDCs designed for interbank and institutional transactions.

Efforts to improve interoperability between CBDCs are also advancing. SWIFT’s Head of Innovation has outlined a roadmap to transform the organization’s CBDC connectivity work from the experimental stage into a commercial solution. As countries develop CBDCs using different technologies and frameworks, SWIFT aims to provide a universal platform that can connect independent digital currency networks and reduce fragmentation across the global payments ecosystem.

CBDC transaction volumes are also expected to grow significantly over the coming years. According to Juniper Research, the total value of CBDC payments is expected to exceed $213 billion annually by 2030. The report notes that domestic payments are likely to drive much of this growth, particularly in emerging markets where mobile phone adoption often exceeds traditional bank account ownership. While cross-border CBDC infrastructure continues to evolve, domestic use cases are expected to account for a significant share of transaction volumes.

Although challenges relating to interoperability, privacy, regulation, and adoption remain, CBDCs are expected to play an increasingly important role in the global financial system. As central banks continue to expand digital currency initiatives, CBDCs are likely to influence how money is issued, transferred, and used in the years ahead.

Frequently Asked Questions (FAQ’s)

1. Is CBDC a cryptocurrency? 

CBDC’s are government-backed digital representations of fiat currency, designed to enhance the efficiency, security, and inclusivity of national payment systems.

2. How are CBDCs different from other forms of digital payment?

CBDCs are a direct liability of a country’s central bank. Unlike many existing digital payment methods, they can allow people to make digital payments without relying on a traditional bank account. CBDCs can also support financial inclusion by helping people who may not have easy access to banking services participate in the digital economy using a basic smartphone.

3. How are CBDCs different from fiat money?

CBDCs are the digital form of fiat money. They have the same value, legal status, issuance framework, and government backing as physical currency. The main difference is that CBDCs exist in digital form, while fiat money is issued as banknotes and coins. In other words, the value remains the same; only the medium changes from paper currency to a digital format. 

4. How would a CBDC transaction work?

Central banks can use three operating models for CBDCs:

• Unilateral CBDC: The Central bank issues the digital currency and is responsible for managing all related functions. 

• Intermediate CBDC: The Central bank issues the digital currency, while private sector intermediaries handle customer-facing services and payment operations.

• Synthetic CBDC: Private sector institutions issue digital money that is fully backed by reserves held at the central bank. In this model, the central bank supports the system through reserve backing, while private institutions manage the issuance and distribution of the digital currency.

5. How many countries have launched CBDC's?

CBDCs are no longer limited to a handful of countries. As of 2026, around 134 countries and currency unions are exploring central bank digital currencies, making CBDCs one of the most actively developed areas in global finance. Of these, 49 countries have reached the pilot stage, while several others have already launched CBDCs for public or institutional use.

6. Has the UAE launched CBDC?

The CBUAE has launched the digital dirham with the support of infrastructure and technology providers G42 Cloud and R3.

7. What is the mCBDC Bridge?

The mCBDC Bridge (mBridge) is a project that enables central banks to use digital currencies for cross-border payments and settlements. It was initially developed by the BIS Innovation Hub in partnership with the central banks of China, Thailand, the United Arab Emirates (UAE), and Hong Kong. In 2024, the Saudi Central Bank (SAMA) joined the initiative. The project aims to make international payments faster, more efficient, and less expensive by allowing participating countries to transact directly using central bank digital currencies.

8. What is Project Aber?

Project Aber is a joint effort that started in 2019, between SAMA (Saudi Arabia Monetary Authority), CBUAE (Central Bank of United Arab Emirates) and six commercial banks, three from each country. The project made use of real money and studied the effect of a single cross-border dual-issued currency. The research revealed that Central banks can use DLT (Distributed Ledger Technology) for domestic and cross-border transactions in new ways.

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