UAE, Saudi digital currency restricted to a few banks

Central banks of the UAE and Saudi Arabia on Tuesday announced that a digital currency the two countries are currently working on will be restricted to a limited number of banks in the initial stage.

The two apex banks said in a statement that one of the objectives of launching the common digital currency project ‘Aber’ is for use in financial settlements between the two countries through Blockchain and distributed ledger technologies.

“As for the mechanism agreed upon by the Saudi Arabian Monetary Authority and the UAE Central Bank for implementation of the ‘Aber’ project, the concentration in the initial stages will be on technical aspects. The use of the currency will be restricted to a limited number of banks in each state. In case that no technical obstacles are encountered, economic and legal requirements for future uses will be considered,” read the statement issued on Tuesday.

The pilot project is aimed at studying the practical application of modern technologies and determining their impact on the reduction of remittance costs and assessment of technical risks and how to deal with them.

The central banks didn’t specify when the project would be launched.

Central banks of some countries have already begun pilot projects to explore the dimensions of Blockchain and distributed ledger technologies in the circulation of digital currencies. Countries already working on the pilot project include Sweden, Bahamas, Uruguay and Russia.

The central bank-based digital currency will make cross-border financial transactions more secure and financially efficient.

The UAE and Saudi Arabia hope that their pilot projects will benefit everyone locally and internationally.

A large number of companies in the UAE are increasingly embracing new technologies such as Blockchain, Artificial Intelligence, Internet of Things, etc., in line with the Fourth Industrial Revolution that is reshaping governments and corporates around the world.

The Abu Dhabi Global Market has been aggressively working on a framework to regulate spot crypto asset activities.

— waheedabbas@khaleejtimes.com