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The world of cryptocurrencies and blockchain technologies is slowly starting to permeate the traditional financial market, and Arabs are willing to become references for other actors using these technologies in large-scale operations.
According to an article published by the Emirates News Agency, the Executive Committee of the United Arab Emirates Coordinating Council announced a few hours ago the results of its first meeting in Abu Dhabi, in which they addressed strategic issues for regional development in the economic and social field and military camps.
The committee, composed of 16 members of both countries and chaired by Mohammad bin Abdullah Al Gergawi, Minister of Affairs of the Cabinet and of the future, on the side of the United Arab Emirates, and Mohammed bin Mazyad Altwaijri, Minister of Economy and planning, on the Saudi side, announced seven joint initiatives, to be implemented in 2019.
Experimenting with Blockchain the issue of an official interbank cryptocurrency
In economic matters, they decided to experiment with blockchain technologies to facilitate financial transactions between the two countries. To this end, they announced a pilot project for the creation of a commonly accepted interbank cryptocurrency in the first instance:
"The cross-border digital currency will be tightly targeted at banks in an experimental phase with the aim of better understanding the implications of Blockchain technology and facilitating cross-border payments.The virtual currency is based on the use of a database distributed among central banks and participating banks on both sides: seeks to safeguard customers' interests, set technology standards and assess cyber security risks.The project will also determine the impact of a central currency on monetary policies ".
Until now, the team has not provided further details on the characteristics of the project. Being only a first draft, it is difficult to have a clear idea of how it will work, but there may be speculations that take into account the purpose of the announcement.
Being a common initiative, it is very likely that both central banks will function as fully effective blockchain nodes and that the traditional banks of each country will, in turn, have lower hierarchy nodes used for transaction processing.
The blockchain will be private, so the public will not be able to access the information, even if it is a centralized blockchain, it is likely to be designed to allow the cancellation of transactions in the event that central banks need it.
Until now, it is not known when the first tests will start, however there is some progress as central banks are quite familiar with the blockchain technologies developed by Ripple, IBM and ConsenSys, which provides them with some fundamental knowledge of xRapid, Hyperledger Platforms and Ethereum .
