The Central Bank of Saudi Arabia (Saudi Arabian Monetary Authority – SAMA) and the Central Bank of the United Arab Emirates (CBUAE) have announced that they have successfully conducted pilot experiments of a joint CBDC (Central Bank Digital Currency) project.
In January 2019, the two central bankers revealed that they were co-developing an interbank digital currency called “Aber” project to examine proof of concept solutions designed to understand how DLT (distributed ledger technology) and CBCD could transform the future of payments. In other words, the central banks launched the “Aber” project to examine whether DLT could enable cross-border payments between the two nations using a new, dual-issued digital currency as a unit of settlement between commercial banks in the two nations and domestically.
The two central bankers from the largest economies in the Middle East have taken one year to complete pilot tests of the project.
The banks completed three distinct testing phases. The first phase explored cross-border settlements between the two central banks. The second phase examined domestic settlements between three commercial banks in each country. The third phase examined cross-border transactions between the three commercial banks in each country using the digital currency.
The project eventually confirmed that a cross-border dual issued currency is technically viable and that it is possible to design a distributed payment system that provides the two nations with significant improvements over centralized payment systems in terms of architectural resilience. The two banks met key requirements “including complex requirements around decentralization and privacy, as well as requirements associated with mitigating economics risks like central bank visibility of money supply and traceability of issued currency.”
Based on the study, the banks proved that DLT technologies could provide high levels of performance while not compromising privacy or safety.