Rumours have recently been circulating concerning the possibility that Saudi Arabia and the United Arab Emirates would join forces to test a new cryptocurrency.
Just two days after the news that Iran will be soon unveiling its new state-backed cryptocurrency, the rumours have been confirmed.
According to the Saudi Arabian Monetary Authority (SAMA), both Saudi Arabia and the United Arab Emirates Central Bank (UAECB) are hopeful for the launch of “Aber” in a near future. It would be used “in financial settlements between the Kingdom of Saudi Arabia and UAE through blockchains and distributed ledgers technologies”.
The decision to jointly work on the project resulted from the fact that the two countries have “central systems for remittances and domestic transactions” which are considered beneficial. A joint cryptocurrency could enhance such benefits.
During the testing, the focus will be on finding out whether the new digital currency would reduce remittance costs. There are also plans to make risk assessments and identify the best ways to manage the technology.
In a first phase following the launch of Aber, the two governments would confine its use to a limited number of banks in the countries. If the introduction of the digital coin was found to be beneficial and feasible, it would be extended to more banks and may eventually be used in an even wider setting. In fact, the currency will be considered for use as “a reserve system for domestic central payments settlement system in case of their disruption for any reason”.
Right now, the initiative seems promising. Once it will be clear how to perfect a cryptocurrency in a way that satisfies both governments, Saudi Arabia and UAE may be able to facilitate the transaction processes not only between their banks but also at a domestic level.