Digital currency is becoming quite popular these days. It is no longer an investment just for the west. It’s now a cross-border business. Today, Saudi Arabia and UAE have come together to launch a common digital currency, Aber, for the two countries.
While the central remittance systems in both countries have “evolved overtime and proved their feasibility,” international remittances have need for improvement, the central banks said.
The proof-of-concept trial will examine if the nations can ultimately reduce remittance costs using a common digital currency called Aber. The study will also look at whether the blockchain system can act as an “additional reserve” for domestic payments.
As of this writing, the new currency is limited to just a few banks, until after the two countries are sure that the currency won’t be subject to technicalities.
A proposed UAE-Saudi digital currency will be restricted to a few banks in each country for executing financial settlements between the two, the Central Bank of the UAE said on Tuesday. The currency project, called Aber, is part of a seven-point co-operation plan agreed upon during the meeting of the Executive Committee of the Saudi-Emirati Co-ordination Council earlier this month.
“The use of the currency will be restricted to a limited number of banks in each state,” the central bank said. “In case that no technical obstacles are encountered, economic and legal requirements for future uses will be considered.”
However, the Central Bank hasn’t stated the dates during which this project, which is based on Blockchain technology, will be launched.
According to the statement, the project will also explore whether blockchain-based financial settlements between the two nations are viable. It’ll also seek to find out if a blockchain system can serve as an additional reserve for domestic payments.
The project will initially focus on the technicalities associated with the technology and the use of Aber will be restricted to a set number of banks in each country.
If SAMA and the Central Bank of UAE do not experience technicalities, they will schedule a date for the official launch of the project.
According to reports on digital currency, SAMA and the Central Bank of UAE share a common interest in launching and running pilot projects. So the use of this new technology is expected to be quite helpful for both countries.