UAE’s Landmark Digital Dirham Transaction with China
In a groundbreaking move, the United Arab Emirates (UAE) and China, both members of BRICS, have successfully completed a cross-border transaction using the new Digital Dirham, bypassing the US dollar. This historic trade settlement, the first of its kind directly from the UAE to China, utilized the innovative ‘M Bridge’ platform, signaling a shift towards digital currency in global trade.
The Digital Dirham: A New Era of Payments
The UAE Central Bank executed the Digital Dirham payment, amounting to Dh500 million (equivalent to $136 million), directly to China. Conducted by Shaikh Mansour, this transaction not only marked a significant technological leap but also showcased the potential of the ‘M Bridge’ payment platform. The event, witnessed by UAE Central Bank officials and 1,056 graduating Emirati students, represents the UAE’s commitment to advancing digital payment systems.
Impact on the US Dollar
The use of the Digital Dirham by BRICS countries, particularly UAE and China, poses a potential challenge to the dominance of the US dollar in international trade. With billions of dollars in trade agreements between the two nations, a shift to Digital Dirham payments could significantly impact the US dollar’s global standing. As the UAE explores innovative ways to prioritize the Digital Dirham, and with China’s encouragement of local currency usage in trade settlements, the US dollar’s role in BRICS trade could diminish.
UAE’s Vision for Digital Currency
The UAE’s Central Bank’s ‘Innovative Projects’ scheme aims to promote the Digital Dirham, reflecting the country’s vision to lead in the digital currency space. This initiative aligns with the broader BRICS strategy to reduce reliance on traditional currencies like the US dollar and embrace digital methods in trade settlements.
The Future of Global Trade and the US Economy
These developments signal a potential shift in global trade dynamics, with the US dollar facing reduced usage in BRICS trade settlements. The move towards digital currencies like the Digital Dirham could have a direct impact on the US economy, altering the traditional supply and demand mechanisms for the US dollar on the global stage.
