The Saudi-Emirati partnership, a strategic collaboration between Saudia Arabia and the United Arab Emirates, will be developing its own virtual currency to be tested in cross-border payment processes.
Traditional cross-border payments are expensive and time-consuming. However, many workers rely on it if they’re working away from their home and families. Blockchain technology has the potential to truly revolutionize this aspect of the financial industry, and more and more institutions and countries are realizing this.
Blockchain Technology on Saudi-Emirati Agenda
According to Engadget, Saudi Arabia and the United Arab Emirates (UAE) will now be a part of this revolution. However, they will be using distributed ledger technology (DLT) for more than just facilitating payment transfers. They will actually be developing their own virtual currency.
This project is one of seven joint projects that the Executive Committee of the Saudi-Emirati Coordination Council is working on. These initiatives are not just finance-related as the partnership will also be working on projects in industries such as tourism and aviation.
While the creation of a Saudi-Emirati cryptocurrency is exciting, the public shouldn’t whip out their virtual wallets just yet. The digital currency will initially be used to test cross-border payment processes between local and central banks. There is no confirmation yet as to whether or not the virtual currency will indeed be available for public purchase post-experimental phase.
An announcement by the Emirates News Agency reads:
The cross-border digital currency will be strictly targeted for banks at an experimental phase with the aim of better understanding the implications of blockchain technology and facilitating cross-border payments. The virtual currency relies on the use of a distributed database between the central banks and the participating banks from both sides. It seeks to safeguard customer interests, set technology standards and assess cybersecurity risks. The project will also determine the impact of a central currency on monetary policies.
Following the Trend
This will, of course, not be the first time that a state-backed cryptocurrency will be developed. Venezuela’s Petro was created as a way to circumvent U.S.-imposed sanctions. Authorities in the country have also forced its senior citizens to accept the Petro as their pension payment instead of the traditional bolivar.
It is also not the first time that blockchain is in the cross-border payment spotlight. BitcoinerX recently reported on HSBC’s success with the technology. The major bank used DLT to settle about $250 million in forex trades over the course of nearly a year.
Do you think that the Saudi-Emirati council will be successful in both their crypto development and in using it for cross-border payments? Let us know in the comments below!
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