UAE, Saudi to Develop Crypto For Cross-Border Transactions

The UAE Central Bank is entering into a joint venture with the Saudi Arab Monetary Authority( Sama) to utilize block- chain technology to deliver a crypto currency accepted in cross-border dealings between the two countries, said its Governor in Abu Dhabi on Wednesday.

Mubarak Rashed Al Mansouri, talking at the Arab region’s top level conference on global banking standards and regulatory and supervisory priorities, said “This is probably the first time ever that witnesses the cooperation of monetary authorities from different countries on this topic and we hope that this achievement will foster similar collaboration in our region.”

In addition, he said that they are studying the concept of developing a digital currency between the United Arab States and Saudi Arabia.

“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.”

He explained that the digital currency is not about customers, it is just between banks.

“This would be more efficient and much more efficient. This is between us and the banks.”

Because of its speculative nature and risks, the UAE Central Bank has not previously endorsed digital currencies such as Bitcoin. Saudi Arabia warned against Bitcoin trading because it was beyond the regulatory reach of the bank.

In an independent announcement, Central Bank of UAE 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.”

Opportunities and Challenges

The participants consist of two central authorities and a number of commercial banks (in each country) that carry out cryptocurrency transactions. Al Mansouri also said that the latest advancements in fintech are both exclusive challenges and opportunities for the industry, and the key to superior understanding of the risks involved is for market participants and regulators to monitor and nullify them.

“Crowd funding platforms and block chain technologies are a case in point. Crowd-funding platforms, for example have gained widespread attention and growth over the previous few years. At the central bank of the UAE, we started developing regulations in this regard in 2016 in order to safeguard the financial system and protect consumers, this project is at a final stage.”