Saudi Arabia, UAE poised to launch digital currency

Although there is much skepticism around bitcoin, the underlying blockchain technology is viewed as a groundbreaking system. (Reuters)
Updated 14 December 2017

Saudi Arabia, UAE poised to launch digital currency

LONDON: Saudi Arabia and the UAE are working on the launch of a digital currency that could be used for transactions between the region’s banks by using blockchain, the technology that underpins bitcoin.
Citing UAE Central Bank Gov. Mubarak Al-Mansouri, Reuters reported on Wednesday that UAE and KSA banks would issue a digital currency that would be accepted in cross-border transactions between the two countries.
In a speech to a regional financial conference, Al-Mansouri explained that blockchain is a shared ledger of transactions, maintained by a network of computers on the Internet rather than by a central authority.
Although there is official skepticism around bitcoin, blockchain is viewed as a groundbreaking system with huge potential for saving time and costs for businesses and financial services.
Arab News recently reported that banks around the world were looking to create digital versions of their currencies. Unlike bitcoin, these digital currencies would be backed by the monetary authorities and could one day replace cash.
James Bernard, development director of the Dubai Multi Commodities Center (DMCC), told Arab News that a clear distinction should be made between blockchain, which offers huge potential, and cryptocurrencies that have faced hacking issues and massive swings in value. “Bitcoin is dependent on blockchain, but the blockchain technology is independent of bitcoin,” Bernard said.
The KSA and UAE central banks have in the past expressed skepticism about bitcoin, with the UAE Central Bank saying it did not recognize it as an official currency.
In July, the Saudi central bank warned against trading bitcoin because it was outside the bank’s regulatory reach.
On Wednesday, however, Al-Mansouri said the central banks wanted to understand blockchain technology better. He told reporters that the UAE-Saudi digital currency would be used among banks, not by individual consumers, and would make transactions more efficient.
“It is digitization of what we do already between central banks and banks,” he said.
At a panel discussion on banking and blockchain during November’s Global Financial Forum — hosted by the Dubai International Financial Center — speakers agreed that blockchain was in its early stages and had many years before going mainstream, but all agreed the potential was massive.
Leanne Kemp, CEO of Everledger, told the forum that banks could benefit from the immutable track-and-trace application of blockchain, which helps enhance trust and security.
Brian Behlendorf, executive director at Hyperledger, explained that there are two different types of blockchain: Permissioned and permission-less, with the latter used by bitcoin.
Behlendorf said he believed the potential benefits of the permissioned blockchain makes it attractive to financial institutions and other enterprises.
At the end of 2016, the Royal Mint of the UK announced plans to launch a digital gold product called Royal Mint Gold (RMG), a joint venture with US exchange, CME. A spokesman told Arab News earlier the system is now “up and running” and the Royal Mint is “in advanced discussions to sign up a number of corporate users.”
“By using distributed ledger technology, we can make it more cost-effective and provide increased transparency for traders and investors to trade, execute and settle gold,” said the Royal Mint.
A decade ago, the UAE and Saudi Arabia discussed the possibility of creating a single currency among members of the six-nation Gulf Cooperation Council but the UAE pulled out of the project in 2009.
However, diplomatic and economic ties between the UAE and Saudi Arabia have been strengthening this year, and last week the UAE said it planned to establish a bilateral committee with Saudi Arabia on economic, political and military issues.

 


Dubai property group Limitless seeks advisers for restructuring

Aerial view of the Sheikh Zayed Road, following the outbreak of coronavirus disease (COVID-19), in in Dubai, United Arab Emirates, March 26, 2020. (REUTERS)
Updated 30 March 2020

Dubai property group Limitless seeks advisers for restructuring

  • S&P Global Ratings said the virus outbreak had exacerbated the supply-demand imbalance in Dubai’s real estate market, where the credit rating agency estimates real estate prices are “approaching levels seen at the bottom of the last cycle in 2010”

DUBAI: Dubai-based property developer Limitless told its creditors last week that it is looking to appoint legal and financial advisers to work on a financial restructuring plan, a company document seen by Reuters showed.
Limitless, along with Nakheel, was among the biggest casualties of Dubai’s property crash and subsequent debt crisis that began in 2009.
The company, formerly owned by state investment vehicle Dubai World, was one of a number of entities in Dubai that were forced to restructure their debts.
“Owing to the liquidity crisis, we are confirming that the company will be unable to pay accrued profit at the end of March 2020,” Limitless said in a letter dated March 23 and sent to Mashreqbank, which works as an agent for a group of the company’s creditors.
A Limitless spokeswoman said: “We have written to our creditors as a first step to finding a solution that will benefit all stakeholders.”
Limitless said in the letter a team from Dubai World was advising the company’s board of directors.
The letter said the company was committed to agreeing “on a restructuring plan for the benefits of the participants and other creditors.”
“To this end, we are in the final stages of engaging legal as well as financial advisers to assist us.”
In 2016, Limitless reached a second restructuring agreement with lenders to pay around $1.2 billion in bank debt in three installments in December 2016, 2017 and 2018, but has only repaid part of it, sources have said.

HIGHLIGHTS

● Limitless, along with Nakheel, was among the biggest casualties of Dubai’s property crash and subsequent debt crisis that began in 2009.

● The company, formerly owned by state investment vehicle Dubai World, was one of a number of entities in Dubai that were forced to restructure their debts.

Dubai — where property prices have been declining for most of the past decade — is bracing for a financial hit as the coronavirus crisis has impacted sectors vital to its economy, such as tourism and construction.
S&P Global Ratings said the virus outbreak had exacerbated the supply-demand imbalance in Dubai’s real estate market, where the credit rating agency estimates real estate prices are “approaching levels seen at the bottom of the last cycle in 2010.”