The central banks of UAE and Saudi Arabia have launched a common digital currency project called Aber.
The currency will be used in financial settlements between the two countries through blockchain and distributed ledgers technologies.
Both the Saudi Arabian Monetary Authority (SAMA) and the UAE Central Bank intend to carry out trials, in an effort to gain insight on how to benefit from the technologies.
Utilisation of the system as an additional reserve system for domestic central payments settlement in the event of any disruption will also be assessed.
The joint launch of the project is said to be driven by the central systems for remittances and domestic transactions in the two countries.
Initially, the projects will be limited to a few banks in the two banks. But first, the central banks will focus on resolving associated technical challenges.
Economic and legal requirements for future uses will be evaluated once the technical hurdles are addressed.
Since it emerged ten years ago, cryptocurrency has been under scrutiny from Governments, regulators and investors.
Nonetheless it has prevailed and some Central Banks are looking more closely into harnessing blockchain technology to create their own.
Saudi Arabia is one country that is embracing the technology and will continue to investigate further.
On the other hand, the Bank of Korea (BOK), says it won’t be issuing a central bank digital currency in the near future.