Saudi Arabia and the United Arab Emirates are exploring the viability of a digital currency that the two countries would use for blockchain-based financial settlements.

‘Aber’ cryptocurrency signals closer financial ties

The common digital currency Aber, launched jointly by Saudi Arabian Monetary Authority (Sama) and the UAE Central Bank (UAECB), will be used in financial settlements between the two countries through distributed ledger technology (DLT) and blockchain systems.

It is understood Aber is still in the ‘proof-of-concept’ stage. This implies that both agencies are still in the process of studying the feasibility of the currency’s practical applications, its impact on the reduction of remittance costs, and the nature of associated technical risks and how to deal with them.

According to the statement, Aber is expected to help 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.

Data and analytics group MEED understands that Sama and UAECB will, in the initial stages, focus on the technical aspects of the common digital currency.

“The use of the currency will be restricted to a limited number of banks in each state,” the two said in a statement. “In the case that no technical obstacles are encountered, economic and legal requirements for future uses will be considered.‏”

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By GlobalData

This article is sourced from Verdict’s sister publication, a leading source of high-value business intelligence and economic analysis about the Middle East and North Africa. To access more MEED content register for the 30-day Free Guest User Programme.