Saudi Arabia and UAE Start Testing Crypto Payments
It was recently revealed that both the countries have initiated the testing phase for using cryptocurrencies as a means to carry out cross-border payments. At the time of writing this news, only the central and local banks of UAE and Saudi Arabia are authorized to access this feature.
The concept of a government-backed cryptocurrency isn’t new. In fact, Venezuela’s highly controversial cryptocurrency Petro made dozens of headlines in 2018. It was viewed as a means to escape the enforced United States sanctions.
UAE and Saudi Arabia are collectively launching their own cryptocurrency. They are close allies and are counted among the two richest nationals in the world. The testing phase will help these countries determine whether blockchain technology is the right way to conduct seamless cross-border payments with lower remittance costs. It will also help in standardizing how state-owned cryptocurrencies will impact the existing monetary policies.
The cooperation between Saudi Arabia and UAE is a part of a seven point project that will help with in strengthening the relationships between the countries. The digital currencies are exclusively meant for cross-border payments which are to be carried out between central and local banks. It remains unclear at this time if the currency will be made available to the public for purchase.
The announcements made by the countries said
“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.”
In related news, Russia also unveiled its plans of creating a cryptocurrency under its central bank. The country is in talks with Brazil, China, India and EEU countries for this cryptocurrency.