Saudi Arabia steps closer to launch CBDC in collaboration with UAE

Saudi Arabia inches closer to launch CBDC in association with UAE. Moreover, SAMA and UAE's report states the advantages of digital currencies.

By · Nov 30, 2020 . 6min read

Saudi Arabia to launch CBDC with UAE news

Saudi Central Bank (SAMA), in collaboration with the Central Bank of the UAE, issued a report discussing the advantages of utilizing a distributing payment system over a centralized payment structure. Saudi Arabia and UAE have issued a joint report on the CBDC pilot. The central banks have terminated a joint 1-year central bank digital currency (CBDC), pilot. Thus, Saudi Arabia moves closer to launch CBDC in collaboration with the UAE.

‘Project Aber’, the new report revealed positive outcomes and marked a significant development across centralized payment systems in terms of architectural flexibility. The central banks are preparing to explore whether blockchain technology can enable cross border payments as planned. The authorities intend to utilize distributed ledger technology (DLT) to investigate the probabilities of the settlement of assets such as bonds.

UAE and Saudi Arabia’s Project Aber occurs in 3 phases

For the uninformed, the project was primarily launched by the two central banks in early 2019, to launch Aber digital currency. Aber indicates crossing boundaries in the Arabic language. The central banks started the project to verify the possibilities of a single dual-issued digital currency as an instrument of domestic and cross-border settlement between Saudi Arabia and the UAE.

The project was divided into three distinct phases that extended the range of the trial to six separate commercial banks. The report records that the project utilized a digital currency supported by real money. Thus, taking greater consideration of concerns encompassing security and enduring payment systems. 

The report further states that a dual-issued CBDC is technically viable for cross border payments. However, it also boosts CBDCs development across centralized payment systems in terms of architectural resilience. The authorities termed the project as successful in satisfying all its goals. Considering the future, the central banks are ready to investigate various options. Moreover, it involves the expansion of delivery versus payment (DVP) structure and a framework for real-time gross settlement (RTGS).

Across the world, Central banks are looking to launch CBDC’s, whereas various countries have already started with the pilot phase. Furthermore, the Bahamas has launched the Sand Dollar. Thus, making it the principal nation across the globe to formally release a central bank digital currency (CBDC). Moreover, the digital currency Sand Dollar plans to develop more financial inclusions among Bahamas’ remote islands.

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