According to the latest announcement, the United Arab Emirates’ central bank and the Saudi Arabian Monetary Authority, the two most powerful economies, released a report on a yearlong joint CBDC project named ‘Arab.’
The first announcement was made in January 2019, where UAE central bank, UAECB, and the Saudi Arabian Monetary Authority, SAMA, declared that they are co-developing an interbank digital currency known as “Aber.”
In light of the ongoing research, the “Aber” Project, a joint effort between the United Arab Emirates and Saudi Arabia, is considered to be an innovative initiative that is among the first of its kind.
Aber was a shared effort of SAMA and UAECB that started with an intention to establish proof of concept(POC) to evaluate the feasibility of declaring a digital currency for central banks. The project strives to improve cross-border payments, reduce transmission times and costs, and to experiment with the direct use of distributed ledger technologies(DLTs).
Since its introduction, usage solutions were designed and implemented, and the process was documented in the project “Aber” Report, and amendments were made accordingly. Finally, all essential requirements were met, including complicated requirements around decentralization and privacy, as well as provisions related to mitigating economic risks.
With such success, it is believed that the project will work as a foundation, focusing mainly on several potential effects on monetary policies and the stability of the financial domain.
Not only this, but Aber’s report also highlights the next actions, including adopting distributed ledger technology to improve the security of existing systems and expanding the scope of future Project Aber trials to include more geographically scattered partners as well as the settlement of other essential assets.
Other Central Banks to Study the Viability of CBDCs
In October 2020, it was announced that China recently released regulatory guidance and legitimacy for a forthcoming central bank digital currency CBDC, digital yuan.
The United Kingdom is no more an exception. Recently, in the month of November, the nation has also announced regulatory proposals for stablecoins and ongoing research into CBDC.
It is the first time Paulo Guedes, Brazil’s economy minister, also declared that the South American superpower will have a CBDC, although he has not given any further details on the CBDC project being conducted by the central bank.