UAE, Saudi to Use Digital Currency to Speed up Transactions

Published December 13th, 2018 - 09:00 GMT
The UAE Central Bank issued a statement on Wednesday. (Shutterstock)
The UAE Central Bank issued a statement on Wednesday. (Shutterstock)

The UAE and Saudi Arabia have started using digital currency which will be backed by fiat currency, Mubarak Rashid Al Mansouri, Governor of the UAE Central Bank, said on Wednesday.

"The Central Bank in collaboration with Saudi Arabia Monetary Authority is undertaking a unique, joint project - leveraging on blockchain and cryptography - to issue a joint digital currency accepted in cross-border transactions between two countries.

"A Distributed Ledger Proof of Concept (PoC) to facilitate such cross-border settlements is already put into motion. The PoC's design involves using digital currency backed by fiat currencies of the two nations," Al Mansouri said while addressing the Arab Fintex symposium in Abu Dhabi.

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The governor said that this is probably the first time ever the two countries witnessed such cooperation in this policy front.

"We hope that the potential success of this initiative will foster similar collaboration in the GCC region and globally."

He said that the digital currency would be used only for the inter-banking channels.

He revealed that the UAE Central Bank was working on a strategic plan to develop fintech which would be supported by a legislative and regulatory framework.

"The Central Bank is developing a fintech roadmap to build to cohesively deploy more balanced regulatory and development initiatives to ensure a healthy and sustainable fintech ecosystem in the long term," he said while addressing the symposium.

The central is also in the midst of finalising crowdfunding regulations to provide more regulatory clarity for the operations of crowdfunding platforms.

He said there is a need for fintech solutions that target the unbanked segments of the population and also reduce the cost of cross-border remittances.

The governor warned that financial consumers should not be the "laboratory mouse" as and when any new financial product or services is introduced.

"We have a responsibility to ensure that the potential risks are clearly identified and measures to mitigate those risks put in place," he said.

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