Saudi Central Bank (SAMA) has jointly released a report with the Central bank of the UAE (CBUAE) citing the many benefits of a distributed payment system over a centralized payment structure. Initially announced in January 2019, Project Aber was a joint project between the UAE and Saudi Arabia on establishing a joint central bank digital currency. Both the banks have vouched to develop a central bank digital currency pilot for 1 year.
Saudi Arabia and UAE Jointly Publishes Report on CBDC
As per the report, the central banks of Saudia Arabia and the UAE are considering removing the bottlenecks associated with central bank digital currencies. Distributed ledger technologies will be adopted to explore the possibilities of settlement of assets like bonds.
The official report cited:
“The project confirmed that a cross-border dual issued currency was technically viable and that it was possible to design a distributed payment system that offers the two countries significant improvement over centralized payment systems in terms of architectural resilience. The key requirements that were identified were all met, including complex requirements around privacy and decentralization, as well as requirements related to mitigating economics risks, such as central bank visibility of money supply and traceability of issued currency.”
Plans to develop the Aber project was first announced in early 2019 to transact financial settlements between Saudi Arabia and the UAE through Blockchain and distributed ledger technologies.
Both Central Banks Touted for a Single Digital Currency
Project Aber was kick-started as one of the seven initiatives agreed upon by the Executive Committee of the Saudi-Emirati Coordination Council at its first meeting in Abu Dhabi in 2019.
In the Arabic language, Aber signifies crossing boundaries. Both the central banks touted a single digital currency as a means for domestic and cross-border settlements between two countries.
The project intends to establish proof-of-concept for issuing a digital currency pertaining to central banks called the Wholesale CBDC. The move intends to develop a cross-border payment system while reducing the time and cost taken to transfer between banks.