Saudi Arabia and the United Arab Emirates are working on developing a new blockchain-based digital currency that would be used for international transactions between the countries.
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Banks Rush to Blockchain
Blockchain technology appeals to banks as it allows for much quicker transfers and the elimination of third-party clearers. The scheme seems similar to the plan reported yesterday for Japanese and South Korean banks to use ripple for international transfers. However, there is one crucial difference: this time the countries are developing their own currency for the job.
Financial Institutions Only
The proposed currency would not be for individual use but instead be confined to banks and financial institutions. In a speech this week Mubarak Rashed al-Mansouri, the UAE central bank governor, announced the move as a, “digitisation of what we do already between central banks and banks”.
The governor anticipated that the move would increase the transparency and efficiency of international transactions.
“An Enron in the Making”
Saudi Arabia had previously been lukewarm on cryptocurrencies, warning potential bitcoin investors that they were not covered by existing regulation. In October Saudi Prince Alwaleed bin Talal called bitcoin an “Enron in the making” and said that he didn’t “believe in it”.
Blockchain Leadership from the UAE
On the other hand, the UAE is a regional leader in cryptocurrencies and blockchain technologies. Dubai has the Global Blockchain Council and authorities there have ambitious plans. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum announced that by 2020 all government transactions will be on the blockchain.
There had previously been plans for a common currency among the UAE and Saudi Arabia but the UAE withdrew in 2009.