UAE, Saudi central banks unveil joint CBDC report
30 Nov 2020
The central banks of the UAE and Saudi Arabia have issued a report on a joint central bank digital currency (CBDC) project.
Originally announced back in January 2019, the so-called Project Aber was a joint effort between the UAE and Saudi to set a “proof of concept” aiming to “contribute in the body of knowledge in CBDC and DLT technologies.”
The combined effort of these two central banks to compile such a report is among the first of its kind, Cointelegraph reports.
The report states that the “Aber” name highlights the project’s core mission: “The name Aber was selected because, as the Arabic word, for “crossing boundaries”, it both captures the cross-border nature of the project as well as our hope that it would also cross boundaries in terms of the use of the technology.”
Divided into three stages that gradually expanded the scope of the trial to six commercial banks, the report states that the project utilised a digital currency backed with real money to enable “greater consideration” of security and existing payment systems issues.
The report adds that a dual-issued CBDC was “not only technically viable” for making cross-border transactions, but that CBDCs present “significant improvement over centralized payment systems in terms of architectural resilience.”
The report concluded by highlighting how Project Aber cleared all obstacles: “The key requirements [...] were all met, including complex requirements around privacy and decentralization, as well as requirements related to mitigating economics risks, such as central bank visibility of money supply and traceability of issued currency.”
A series of next steps regarding research and policy are then recommended in the report, such as the adoption of DLT to boost existing system security, “offering a DLT-based payments rails,” and increasing the scope of future Project Aber trials.