The Saudi Arabian Monetary Authority (SAMA) and the UAE Central Bank (UAECB) have announced in a joint statement the launch of their pilot project Aber, a common digital currency between the two countries. Its main objective is to enable banks in both countries to deal directly with each other digitally, and to conduct financial remittances through the use of blockchains and distributed ledger technology, the statement said.
Aber comes within the framework of the Azzam strategy, announced between Saudi Arabia and the UAE, to intensify bilateral cooperation in matters of mutual interest, among them financial services.
In the statement, SAMA and the UAECB expressed hope that Aber will be of local and international benefit. It is different from international digital systems such as Ubin and Jasper, launched by the Monetary Authority of Singapore (MAS) and the Central Bank of Canada respectively in 2016, in that the latter systems use digital remittances locally, not across borders.
Aber is still an experimental project, so it is too early to judge its benefits, but I believe it will have lots of positives, among them reducing banks’ heavy dependence on cash when making remittances, and reducing the cost of processing them.
It will also create jobs for Saudis and Emiratis in very specialized and advanced technological fields such as blockchains and distributed general ledgers. Moreover, it will improve transparency and efficiency, enabling banks and their customers to easily trace and track remittances executed between the two countries. Aber’s success could pave the way for similar joint projects between Saudi Arabia and the UAE.
• Talat Zaki Hafiz is an economist and financial analyst.