Saudi Central Bank (SAMA), in partnership with the Central Bank of the UAE, released a report suggesting the benefits of using a distributing payment system over a centralized payment structure. Both countries’ central banks have concluded a joint 1-year central bank digital currency (CBDC) pilot. Dubbed ‘Project Aber,’ the new report showed promising results and marked a significant improvement over centralized payment systems in terms of architectural resilience. The central banks are planning to navigate the economic risks associated with the CBDCs.
Central banks aim to use digital currency for cross-border payments.
The authorities aim to adopt the DLT technology to explore the possibilities of settlement of assets like bonds. The two central banks initially launched the project in early 2019 to launch the ‘Aber’ digital currency, a name that means ‘Crossing Boundaries’ in the Arabic language. The central banks initiated the project to check the possibilities of a single dual-issued digital currency as an instrument of domestic and cross-border settlement between the two countries.
The project confirmed that a cross-border dual issued currency was technically viable. Designing a distributed payment system that offers the two countries significant improvement over centralized payment systems in terms of architectural resilience is possible.
Central banks across countries continue to experiment with CBDCs.
Several major central banks around the world are now actively researching central bank digital currencies and making plans for real-world testing. Though many smaller economies have already launched versions of their digital currencies, China is the only major one to complete the development and initiating a full-fledged plan to test the digital yuan. As reported earlier, the Cayman island launched a national digital currency this year. Countries including Canada, Japan, the Philippines, and many others are actively exploring CBDCs.