Recently, the Central Bank of the UAE partnered with Saudi Central Bank (SAMA) issued a report which explains all the benefits of using a distributed payment system and combining it with a centralized payment structure. The two joined forces to work on their own central bank digital currency (CBDC).
UAE and Saudi Arabia central banks publish a joint report
The banks have successfully concluded their CBDC pilot, on which they collaborated with for one year. The new report offers details on the so-called ‘Project Aber,’ and it shows rather promising results of their research and development.
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The report particularly stresses major improvements when it comes to the architectural resilience of centralized payment systems.
The next step for the banks is to mitigate economic risks that were often pointed out when it comes to CBDCs. The central banks plan to adopt DLT and look into whether assets such as bonds can be settled on it.
What did the banks discover, and what is next?
Initially, the banks started collaborating on this issue back in early 2019. Their goal was to launch the cryptocurrency called Aber, which translates to ‘Crossing Boundaries,’ in the Arabic language. Now, the banks’ findings say that a dual-issued cross-border cryptocurrency is technically viable.
Not only that, but it is also possible to create an entire distributed payment system, which will bring significant improvements over the current system that the countries are using.
All major requirements that were identified during the research were met, including things like decentralization, privacy, or mitigation of economic risks. The next step in the banks’ research is the exploration of new options, such as the expansion of delivery vs payment structure.
A framework for RTGS (Real-Time Gross Settlement), and more. They noted that there is even the possibility of expanding the project geographically, which would allow them to include other central banks, and link entire heterogeneous networks.