Reportedly planned only for inter-bank transactions between two countries<\/b>
\nSaudi Arabia and the United Arab Emirates (UAE) have announced plans to issue a cryptocurrency for use in cross-border transactions. This, despite the fact that the Saudi Arabian Monetary Authority (SAMA) has effectively banned digital currencies in the Middle Eastern country.
The new digital currency, which will be based on blockchain technology, will reportedly only be used for inter-bank transactions between the two countries, which share a border in the eastern Arabian Peninsula, and not for customer use. No launch date has been announced.
\u201cThis is probably the first time ever that we witness the cooperation of monetary authorities from different countries on this topic. We hope this achievement will foster similar collaboration in our region,\u201d UAE Central Bank Governor Mubarak Rashid al-Mansouri said earlier this week during the Arab #FinTex Symposium on Blockchain & Financial Inclusion in Abu Dhabi, a meeting on global banking standards and regulation for the Arab region, according to Gulf News.
Al-Mansouri noted this is \u201cjust a study\u201d and that they \u201chave not gone deeper into it.\u201d
However, experts are skeptical about the plan.
\u201cThis looks like a lazy public relations initiative,\u201d Dr. Alex Coman, a researcher at the Adelson School of Entrepreneurship in Israel\u2019s Interdisciplinary Center Herzliya, told The Media Line Thursday. \u201cWhy not have the entire Arab League join in on this currency? That way you would have a massive body of countries doing business with one another.\u201d
While the UAE has made moves in recent months to adopt blockchain technology for its own uses, both countries have remained standoffish toward public use of cryptocurrencies.
In Saudi Arabia, SAMA has warned citizens of the \u201cnegative consequences\u201d of trading bitcoin, warning it \u201cis not a currency approved within the Kingdom,\u201d al-Arabiya reported in July 2017. An August 2018 warning noted that \u201cvirtual currency,\u201d which it calls \u201cget rich\u201d schemes, \u201care not approved as official currencies in the kingdom and no parties or individuals are licensed for such practices by regulators in the kingdom.\u201d
Despite this warning, in February, SAMA signed an agreement with cryptocurrency Ripple to \u201chelp banks in the KSA [ Kingdom of Saudi Arabia] improve their payments system using xCurrent,\u201d Ripple\u2019s payments processing system. Toshi Times also noted that in May, the Saudi Ministry of Communications and Information Technology hosted a \u201cblockchain bootcamp\u201d with blockchain software company ConsenSys, which focuses its efforts around the cryptocurrency Ethereum.
Likewise, Dubai has tried to wave investors and consumers off of trading in bitcoin, but has adopted blockchain and cryptocurrencies for state uses.
\u201cThe Dubai Blockchain Strategy aims to position Dubai as a leader in this global technology. Dubai is on course to become the first economy to operate its own cryptocurrency by the year 2020 and the Dubai Land Department is possibly the world\u2019s most advanced use of blockchain by any government entity,\u201d Rashid Yusup, the CEO of Taklimakan, which provides services in crypto education, analytics and social networking, told al-Bawaba in April.
The Dubai Blockchain Strategy is a massive plan to convert the Gulf emirate to a completely electronic transaction system governed by blockchain, Forbes explained. The plan would convert all visa applications, bill payments and license renewals to the service by 2020. As those tasks together account for over 100 million documents each year, the country would save 25.1 million man-hours, or $1.5 billion, by going paperless.
Part of the program went live in October, when consumers in the capital of Dubai began to use the government\u2019s digital currency Emcash to make retail payments in-store and pay for government utilities, telecommunications and school fees in government shopfronts. Emcash is a state-backed subsidiary of the Dubai Department of Economic Development, which is run in conjunction with blockchain payment provider Pundi X, Coin Telegraph reported.
\u201cDubai is paving the way for checks and balances and they are regulating [this industry],\u201d Nassar Achkar, CEO of the Dubai-based Hyperchain blockchain technology service, told The Media Line Thursday. \u201cBanks are relying on the technology behind the cryptocurrency to use it because it\u2019s faster, more efficient and more transparent.\u201d<\/p>\n