The Saudi Arabian and United Arab Emirates (UAE) governments have announced that their joint cryptocurrency, called Aber, will soon be trialled by selected banks in both countries.
The Saudi Arabian Monetary Authority (SAMA) and the United Arab Emirates Central Bank (UAECB) clarified in a joint statement that one of the main objectives of launching Aber was for use in financial settlements between the countries by means of Distributed Ledger Technology (DLT).
The trial will test the feasibility of using the cryptocurrency in practical applications, help determine its impact on the improvement and the reduction of remittances costs and assess the technical risks involved.
Furthermore, it will establish an additional means for the central financial transfer systems of the two countries by enabling banks to directly deal with each other in conducting financial remittances.
“SAMA and the Central Bank of UAE share the same desire to launch pilot projects in the use of these technologies to identify them and learn how to benefit from them,” said a statement from SAMA announcing the project.
The statement attributed the agreement to launch the 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 over time 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,” continued the statement.
SAMA and UAECB said that they hoped the results of the pilot project would be of benefit to other financial institutions, both locally and internationally.
“Based on this desire, the two countries do not only aspire to be the forerunners in the application of modern technologies, but also in their adaptation, development and delivery to the world. Hence, the two countries embarked on carrying out the experiment of issuing a common digital currency for use across borders to carry out remittances,” added the statement.
Both SAMA and UAECB emphasised that their concentration in the initial stages of the project will be on technical aspects. The use of the currency will be restricted to a limited number of banks in each state.
“In case that no technical obstacles are encountered, economic and legal requirements for future uses will be considered,” the statement concluded.