UAE Central Bank launches Digital Dirham to revolutionize financial landscape

Omar Abbas - | Business

The Central Bank has revealed its plan to implement the "digital dirham," a step that will completely alter the banking and currency industries.

Their annual report from the previous year states that there are a lot of advantages to this digital money over regular bank deposits.

Significant strides toward executing the digital currency strategy were made in 2023, according to the Central Bank's annual report. The Central Bank Law's revisions and the introduction of digital dirham as legal money are significant turning points. The first digital dirham was issued at this crucial moment, and the first cross-border payment transaction was started.

Characteristics of the Digital Dirham

The digital dirham, which is expected to be issued directly by the Central Bank, is being called a revolutionary kind of digital currency. Notably, it will be fully replaceable, meaning that cash and traditional bank deposits can be traded for it one-to-one. The study presents "Digital Dirham Sukuk" with denominations ranging from 5 to 1000 dirhams.

The Central Bank identifies four core advantages of the digital dirham. Firstly, it will serve as a sovereign digital currency endowed with encryption capabilities. Secondly, it will support the execution of smart contracts and programmable transactions, facilitating instant settlement between peers. Thirdly, it promises to enhance efficiency in retail and wholesale transactions as well as cross-border payments. Finally, its deployment is expected to bolster the nation's digital economy and promote financial inclusion.

It is projected that the adoption of the digital dirham will result in six main economic advantages. Increased GDP digitization and innovation, improved efficiency across multiple sectors, improved international trade relations, decreased transaction costs, increased flexibility and competition within the financial sector, and the reduction of risks related to cross-border payments and credit settlements are a few of these.

Central to its mission, the digital dirham aims to expedite the transition towards a fully digital economy. By supporting both retail and wholesale transactions and streamlining cross-border payments, it seeks to fortify the country's economic infrastructure. Moreover, it is designed to serve as a secure and cost-effective means of payment, thereby fostering global trade and serving as a reliable store of value.

Global Impact and Future Prospects

Globally, the idea of central bank digital currencies (CBDCs) is gaining ground as a solution to problems with both domestic and international payments. CBDCs have the potential to completely transform the global financial scene by removing obstacles to cross-border transactions and encouraging innovation in domestic payments.

The digital dirham's introduction by the Central Bank is a calculated step in the direction of modernizing the financial system. The digital dirham, with its capacity to boost productivity, encourage creativity, and fortify international economic connections, portends a bright future for virtual currencies and financial accessibility. It goes without saying that the impact of implementation on both domestic and foreign markets will be closely watched as it moves forward.

About Author

Omar Abbas
Omar Abbas
203 Total posts


Read Also

Business
UAE: DIB resolves salary payment issues post-system upgrade

A recent system upgrade caused disruptions in some clients' wage payments, which Dubai Islamic Bank (DIB) resolved.

Business
UAE: Al Maktoum Airport to Revolutionize Economy and Tourism

Dubai's Al Maktoum International Airport (DWC) represents a monumental leap forward in the emirate's ambitious plans for economic expansion.

Business
Dubai Chamber of Commerce introduces Colombian Business Council initiative

The Colombian Business Council will be established, according to plans revealed by the Dubai Chamber of Commerce, in a major step toward strengthening business ties.

Business
UAE announces the deadline date for mandatory corporate tax registration

The UAE's Federal Tax Authority (FTA) has released a strict guideline on corporate tax registration, highlighting the need for resident enterprises with licenses granted in March or April to comply.

Business
Dubai rental prices expected to increase by 10% for the rest of 2024

Dubai rents rose by almost 10% in the first half of the year, and experts predict that the city's housing market would see another 10% increase in the second half.

Business
UAE launches New Measures to Stop Unwanted Marketing Calls and Protect Privacy

The Communications and Digital Government Regulatory Authority has implemented steps to safeguard community members from the nuisance of unsolicited marketing calls.

Business
UAE reveals new regulations sparking concerns among cold callers

For Mohammed A, a Sri Lankan expat in Dubai, the prospect of a job wasn't just about employment; it was a chance at redemption.

Business
UAE: Banks introduce discounted financing rates for Golden Visa holders

Banks in the United Arab Emirates are rolling out the red carpet for Golden Residency holders, offering a suite of financial products tailored to meet their unique needs and preferences.

Business
Britain begins circulating banknotes bearing the image of King Charles

Wednesday saw the introduction of King Charles' portrait banknotes into circulation in Britain, almost two years after he succeeded the late Queen Elizabeth II.

Business
New York Stock Exchange says glitch that showed Berkshire Hathaway down has been resolved

A technical issue that forced trading for several large equities to halt and resulted in a 99.97% decline in Berkshire Hathaway's stock price was fixed, the New York Stock Exchange announced on Monday.

Business
Indian stocks decline amid poll expectations

Tuesday saw the biggest sell-off in Indian stocks in four years as the results of the vote counting indicated that the alliance led by Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) may not secure an overwhelming majority, as...

Business
UAE declares significant fuel price decrease for June 2024

Recently, news of lower fuel prices starting in June 2024 from the United Arab Emirates (UAE) grabbed headlines.

Business
Emirates Airlines announces the exclusion of Boeing 777X deliveries

Emirates Airlines, a leading global carrier, continues to navigate the dynamic aviation landscape with strategic decisions aimed at enhancing operational efficiency and customer satisfaction.

Business
Saudi Aramco’s $12 billion stock offer sells out in hours

The $12 billion share offering by Saudi Aramco was fully subscribed quickly after it opened on Sunday, which is good news for the government, which is looking to raise money to support a significant economic transformation plan.

Business
UAE announces an annual noon work ban to protect workers starting from this date

In a steadfast commitment to safeguarding worker health and well-being, the Ministry of Human Resources and Emiratization of the United Arab Emirates (UAE) has reinstated its annual noon work ban.

Business
UAE, Qatar sign agreement to prevent double taxation

The United Arab Emirates and Qatar have recently entered into an agreement aimed at preventing double taxation and combating fiscal evasion of income taxes.

Business
Abu Dhabi Chamber unveils UAE Digital Commerce and Innovation Growth Plans

A study showcasing the substantial expansion and promise of digital commerce in the United Arab Emirates was released by the Ministry of Economy and the Abu Dhabi Chamber.

Business
UAE Cybersecurity unveils strategies for secure remote work

The UAE Government Cybersecurity Council is sounding the alarm on the pressing need to fortify remote work environments.

Business
Dubai World Trade Center unveils the Work-from-Home License Initiative

Dubai World Trade Center (DWTC) has introduced commercial license packages tailored for remote work within "Expo Village," situated in the vibrant Expo City of Dubai.

Business
UAE President announces his visit to China on this date

The UAE President, Sheikh Mohamed bin Zayed Al Nahyan, is scheduled to undertake a significant state visit to the People’s Republic of China, beginning on Thursday, May 30.

UAE launches New Measures to Stop Unwanted Marketing Calls and Protect Privacy