Saudi Arabia and UAE unite for digital currency dream
The Saudi Arabian Monetary Authority (SAMA) and the United Arab Emirates Central Bank (UAECB) have plans to unleash a digital currency on blockchain.
Called “Aber”, the project is for use in financial settlements between the two nations. (They don’t explain the word Aber, but it’s a name that derives from the Arabic “abir”, which can mean “passing by”, “crossing”, or “traveling on a road”. It can also mean “one who interprets dreams or books”.)
At present, they’re travelling cautiously together as ther proof of concept (PoC) will look at the “practical application and the determination of their impact on the improvement and the reduction of remittances costs and the assessment of technical risks and how to deal with them”.
This follows on from last month when they launched a PoC for experimenting with blockchain to help cross-border payments between the two countries.
At that time, CBUAE said: “Some media have reported incorrectly that UAE and Saudi Arabia have started using digital currency for cross-border settlements which will be backed by fiat currencies of the two nations.”
It’s not in use yet, but now we have some more details about their digital dream. There are no timelines in any of this.
They will launch this project jointly “rather than independently in each country” as both nations have in place central systems for remittances and domestic transactions which have “evolved overtime and proved their feasibility”.
However, SAMA and UAECB do point out that there are still some aspects of international remittances that need “further development”. The digital currency may contribute to supporting this development.
The Aber project will also examine the concept of an additional reserve for a domestic central payments settlement system in case of disruptions.
The project’s initial stages will be on technical aspects. The use of the currency will be restricted to a limited number of banks in each state.
Both add: “In case that no technical obstacles are encountered, economic and legal requirements for future uses will be considered.”