The Saudi Arabian Monetary Authority (SAMA) and the United Arab Emirates Central Bank (UAECB) announced the launch of a common digital currency called ‘Aber’, which will be used in financial settlements between the two countries through Blockchain and Distributed Ledgers technologies.
The initiative, was among the seven strategic initiatives that was announced on January 19, 2019, in Abu Dhabi by the Executive Committee of the Saudi-Emirati Coordination Council.
Through the framework of this “proof-of- concept” digital currency, the two central banks are studying the impact on the improvement and reduction of remittance costs and the assessments of risks.
“Furthermore, it will establish an additional means for the central financial transfer systems of the two countries and enable banks to directly deal with each other in conducting financial remittances,” SAMA said in a statement.
The statement attributed the agreement to launch this project jointly rather than independently in each country to the fact that the two countries have in place central systems for remittances and domestic transactions which have evolved overtime and proved their feasibility.
The project will also enable considering the possibility of using the system as an additional reserve system for domestic central payments settlement system in case of their disruption for any reason.
As for the mechanism agreed upon by the two central banks for the implementation of ‘Aber’ project, the statement emphasized that 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,” it said.