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.

 


SoftBank to invest $40bn for new Indonesia capital

The new capital is to be built on the island of Borneo, where the Kutai National Park is known for its rainforests and its population of orangutans and other primates. (Shutterstock)
Updated 18 January 2020

SoftBank to invest $40bn for new Indonesia capital

  • Son joins Abu Dhabi crown prince and former British PM in steering committee for city

JAKARTA: Japan’s SoftBank is offering to invest $30 billion to $40 billion in the development of a new Indonesian capital, an official said Friday.

The billionaire founder and chief executive of SoftBank, Masayoshi Son, hinted at partnering with the Indonesian government to fund the project when he met President Joko Widodo last week in the capital, Jakarta.
Son and former British Prime Minister Tony Blair have been included in the steering committee to be led by Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed Al Nahyan to oversee the construction of the new capital city on the island of Borneo.
Indonesian Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan told a news briefing that SoftBank was offering $30 billion to $40 billion, though it was not immediately clear what project the Japanese conglomerate would invest in specifically.
“We have not yet decided how they would invest, it could be for education, a research center or hospital development,” Pandjaitan said. He said he will meet Son in Davos and Tokyo later this month to finalize the plan.
After meeting Widodo last week, Son told reporters that he was interested in supporting “a new smart city, the newest technology, a clean city and a lot of artificial intelligence.”
Widodo announced last August that Indonesia’s capital will move from overcrowded, sinking and polluted Jakarta to a site in the sparsely populated East Kalimantan province on Borneo, known for rainforests and orangutans.

BACKGROUND

The capital’s relocation to a 256,000-hectare (632,580-acre) site almost four times the size of Jakarta will cost an estimated 466 trillion rupiah ($34 billion). The government is set to begin the construction later this year.

The capital’s relocation to a 256,000-hectare (632,580-acre) site almost four times the size of Jakarta will cost an estimated 466 trillion rupiah ($34 billion). The government is set to begin the construction later this year.
Investors from Asia, the Middle East, the US and China have shown interest in developing the city, Pandjaitan said.
Jakarta, with 30 million people including those in the greater metropolitan area, is prone to earthquakes and flooding, and is rapidly sinking due to the uncontrolled extraction of ground water.
Monsoon rains and rising rivers early this month left more than 60 people dead and 500,000 displaced.
Mineral-rich East Kalimantan was once almost completely covered by rainforests before illegal logging removed much of its original growth. It is home to only 3.5 million people and is surrounded by Kutai National Park, known for orangutans and other primates and mammals.
Indonesia is an archipelago nation of more than 17,000 islands, but currently 54 percent of the country’s nearly 270 million people live on Java, the country’s most densely populated island where Jakarta is located.