Touted as two of the most progressive and welcoming markets for digital currencies in the region, the UAE and Saudi Arabia remain steadfast in their ambition to create an electronic currency to facilitate trade and foster closer, more efficient bilateral banking and finance ties.
At the first Finance and Investment Committee of the Saudi–Emirati Coordination Council meeting which took place earlier this week, the UAE and Saudi governments agreed on a number of initiatives including: issuing and using a virtual experimental electronic currency; devising a mechanism to enable banks of both countries to enhance their business; coordinating on fintech initiatives; facilitating the flow of traffic at ports; and enhancing the strategic partnership between the two countries in the common market.
“The UAE is keen to strengthen joint cooperation frameworks with Saudi Arabia through joint strategic projects in all economic and investment fields, to create a more prosperous future for current and coming generations of both countries. This meeting discussed pivotal economic trends such as the issuance and use of an experimental virtual electronic currency, the facilitation of customs procedures for cross-border trade and the exchange of goods,” Younis Haji Al Khoori, the undersecretary of the UAE’s Ministry of Finance, said.
This commitment is not surprising. Saudi and the UAE over the last few years have worked very closely together to develop the crypto and distributed ledger technology (DLT) proposition for both economies. At the end of last year, the central banks of both countries concluded their years-long cryptocurrency initiative, Project Aber, which offered a proof of concept to support other central banks in building a cross-border payment ecosystem powered by DLT. The project, which involved Shariah banks such as Dubai Islamic Bank, Al Rajhi Bank, Alinma Bank and Riyad Bank, confirmed that a dual-issued central bank digital currency is technically possible, allowing two countries significant improvement over centralized payment systems in terms of architectural resilience. It is worth noting that the Central Bank of the UAE in March joined Project Inthanon–LionRock, an initiative by the Hong Kong Monetary Authority and the Bank of Thailand with the support of the Bank for International Settlements Innovation Hub Centre to study the application of a central bank digital currency to facilitate cross-border payments.