Two Middle Eastern central banks present project report for joint CBDC
Research into a common central bank digital currency is a novelty so far.
The central banks of two of the most powerful countries in the Middle East today presented their report for a one-year joint project on Central Bank Digital Currencies (CBDC). The result is a praise of block-chain technology.
Launched jointly by the United Arab Emirates (UAE) and Saudi Arabia in 2019, Project Aber was designed to explore the practical use of a digital currency, with the aim of „gaining Bitcoin Trader new insights into central bank digital currencies and block-chain technology“.
The joint research by two central banks on such a project is a first. In this context, the report highlights why the project name „But“ symbolises the project’s objective:
We have chosen the name „But“ because in Arabic it means „the crossing of borders“, which reflects both the cross-border/international nature of the project and our hope that it will allow us to „cross borders“ in terms of technology.
A digital currency was used
The project was divided into three different phases, which gradually expanded the scope of testing to six banks. A digital currency was used, linked to real money, to create „greater seriousness“ in the processing of payments and to make the aspect of security all the more important.
The project report concludes that the common central bank digital currency „is not only technically suitable for processing cross-border payments“, but that CBDCs „are a significant improvement over centralised payment systems in terms of resilience“.
Project But was able to meet all the basic requirements for such a payment system: „The basic conditions were all met, including complex requirements regarding data protection and decentralisation, as well as requirements to minimise economic risks“.
Finally, the report made recommendations for further research on implementation. These recommendations included, on the one hand, the use of block chain technology to improve the security of existing payment systems and „open block chain-based payment channels“ and, on the other hand, the scope of Project But should be expanded to include partners in other regions and other financial products such as bonds.
In addition to Project Aber, other central banks have also been working on their own digital currencies in recent months. China is probably making the fastest progress in this regard and has already created a legal framework for the digital yuan. Meanwhile, the UK is also trying to sound out the legal requirements for a digital currency, while Brazil has announced that it definitely wants to introduce its own CBDC.