The central bank of the United Arab Emirates (UAE) is reportedly working on a blockchain-based cryptocurrency with the Saudi Arabian Monetary Authority (Sama). The cryptocurrency is set to be used for interbank transactions only.
According to a report published by local news outlet Gulf News, the financial institutions will issue the digital currency to use it in cross-border transactions between both countries. The report quotes Mubarak Rashed Al Mansouri, the governor of the UAE’s central bank, who was speaking at a high-level meeting for global bank standards and regulatory and supervisory priorities for the Arab region.
He was quoted as saying that this is “probably the first time ever” that two countries cooperate on creating a blockchain-based cryptocurrency, and that regulators hope “this achievement will foster similar collaboration in our region.” He added:
It’s just a study between UAE and Saudi [Arabia] and have not gone deeper into it. We have not put a framework when the study will be completed and who will be involved from both parties.
Al Mansouri clarified, however, that the cryptocurrency won’t be seen by consumers in general, as it’s set to only be used between banks. Per his words, it will be a way to make interbank transactions “much more efficient.”
In a separate statement, the UAE’s central bank reportedly said:
CBUAE and Sama intend to execute a joint crypto-currency and Distributed Ledger Proof-of-Concept (PoC). The PoC’s design mainly focuses on the transfer of ownership of a central bank asset (crypto-currency) among participants.
Notably, the UAE’s central bank, as CryptoGlobe covered, has earlier this year warned against cryptocurrency scams, including money laundering and their use to finance terrorism or other illicit activities, but predicted electronic money would replace cash in the future. Saudi Arabia has also warned against cryptocurrency trading, as cryptos are outside of regulators’ reach.
The space has seemingly been growing in the country, however, as a new cryptocurrency exchange called Bitex was launched there last month. The new trading platform reportedly offers BTC, BCH, ETH, and LTC trading pairs.
Reports suggesting Saudi Arabia itself has been planning to launch its own cryptocurrency have been circulating since last month. Per the Innovation Center (SPARC) director of the Sama, Mohsen Al Zahrani, the crypto is set to be launched next year.