Today's Edition
BATOOL GHAITH (ABU DHABI)
Experts say the UAE’s Digital Dirham is not merely a technological upgrade, it is a structural shift that could redefine how money moves, how economies grow, and how financial power is exercised in the digital age.
Positioned at the heart of the UAE’s Financial Sector Strategy 2031, the Digital Dirham represents a decisive step in the country’s ambition to become a global hub for financial innovation and fintech.
Unlike private cryptocurrencies or unregulated digital assets, the Digital Dirham is a central bank digital currency (CBDC), issued and fully backed by the Central Bank of the UAE (CBUAE), operating within a secure, regulated financial framework.
Hosam Ayesh, economic analyst and expert, describes the Digital Dirham as a foundational shift in the UAE’s financial architecture.
“The Digital Dirham represents a key step within the UAE’s Financial Sector Strategy 2031, aimed at positioning the country as a global hub for financial innovation and fintech,” he told Aletihad. “At the same time, it strengthens the comprehensive digital transformation of payments and financial services.”
According to Ayesh, the Digital Dirham’s importance lies in its role as a bridge between traditional finance and technology-based financial systems.
“Each Digital Dirham is supported by a physical dirham or an equivalent cash deposit held in a regulated account,” he explained, adding that all transactions are recorded on distributed ledger infrastructure, enhancing transparency while reducing manipulation risks.
From a macroeconomic perspective, Ayesh emphasised the Digital Dirham’s ability to improve efficiency across the economy. “Its primary impact lies in reducing payment costs, accelerating settlements, and improving capital efficiency,” he said.
Ayesh noted that government entities will be able to collect fees and disburse payments in seconds rather than days, while companies can digitally settle invoices and manage supply chains at significantly lower cost. Faster liquidity circulation, he added, supports GDP growth by improving the overall efficiency of financial markets.
He also highlighted the Digital Dirham’s role in reshaping the cash economy. As usage expands, reliance on physical cash is expected to decline, particularly for daily transactions and government payments.
“This will limit the shadow economy and increase the traceability of financial flows,” Ayesh said, noting that it strengthens efforts to combat money laundering and terrorist financing while supporting digital financial inclusion across different social and age groups.
On inflation and currency policy, Ayesh stressed that the Digital Dirham does not alter the UAE’s monetary fundamentals.
“A digital currency does not protect against inflation by itself, its value remains tied to the physical dirham and the Central Bank’s monetary policy.” However, he added that access to real-time spending data allows policymakers to respond more quickly and accurately to economic shifts, indirectly improving inflation management without changing the exchange-rate regime.
While Ayesh focuses on stability and system-level efficiency, Dr. Ryan Lemand, Founder and CEO of Abu Dhabi-based Neovision Wealth Management, approaches the Digital Dirham from the perspective of innovation and economic transformation.
“The Digital Dirham strengthens the UAE economy by making payments faster, cheaper, and more secure, but its impact does not stop at efficiency,” Lemand told Aletihad.
According to Lemand, the real transformation begins when money becomes programmable. “Once programmable money becomes widely available, entire business models can evolve, subscriptions can become usage-based, rent can be settled by the hour rather than monthly, and micro-transactions can finally scale in media, mobility, and AI services,” he said.
Lemand noted that while trade, logistics and financial services will benefit immediately from faster domestic and cross-border settlement, other sectors may see even greater gain.
“Tourism could reinvent itself through instant foreign-exchange conversion and pay-as-you-go experiences for visitors,” he said.
He also highlighted opportunities for the creative and cultural economy, describing the Digital Dirham as a catalyst for sectors that rely on rapid, automated, or high-frequency payments.
Beyond innovation, Lemand stressed the operational impact on both government and business.
“The deeper impact lies in eliminating entire categories of operational work,” he said. Over time, he added, governments could automate subsidies, social payments, customs fees, and VAT refunds end-to-end, while corporate treasury operations could become largely autonomous, with liquidity moving automatically based on real-time conditions.
Lemand also linked the Digital Dirham to the UAE’s broader smart-city and infrastructure ambitions.
“Once payments are programmable, infrastructure itself becomes financially intelligent,” he said, allowing public services to operate seamlessly without constant user intervention.
“The UAE is one of the few countries moving a central bank digital currency from experimentation into real government transactions while simultaneously helping design the next generation of cross-border settlement,” Lemand added.
From an investment perspective, Lemand believes the Digital Dirham strengthens the UAE’s appeal beyond traditional cost advantages.
“Foreign investors are increasingly drawn to jurisdictions where financial infrastructure is predictable, programmable, and future-proof,” he said, pointing out that the Digital Dirham positions the UAE as a rule-setter in global finance rather than a rule-taker.
