Blockchain technology is gradually penetrating the centralized financial sector all over the world. After the announcement of South Korea and Japan’s joint testing of a blockchain-based cross-country payment system, the Middle East has now jumped into the blockchain pool.
On Wednesday, Mubarak Rashed Al-Mansouri, the governor of the Central Bank of the UAE, confirmed that his bank and the central bank of Saudi Arabia, the Saudi Arabian Monetary Authority (Sama), are working on a joint project to develop a blockchain-based system and will also issue a cryptocurrency to ease cross-border transactions between the countries.
Al-Mansouri unveiled the details of this joint project while speaking on the sidelines of the Arab Monetary Fund (AMF) meeting organized at Abu Dhabi.
As quoted by Gulfnews.com, Mr. Al-Mansouri stated: “This is probably the first time ever that witnesses the cooperation of monetary authorities from different countries on this topic and we hope that this achievement will foster similar collaboration in our region.”
He also confirmed that the project is still in the initial phase and that the parties have not even set a timeframe yet.
“It’s just a study between UAE and Saudi [Arabia] and have not gone deeper into it. We have not put a framework when the study will be completed and who will be involved from both parties,” he added.
Also, only the two central banks and other participating banks in the two countries will be able to use the issued cryptocurrency – it will not be available for the retail consumers.
“This would be more efficient and much more efficient. This is between us and the banks,” Mr. Al-Mansouri said.
Addressing the current craze in the cryptocurrency and ICO market, though without mentioning it directly, he said that regulators should monitor and study the risks involved with fintech advances and try to mitigate them.
“Crowd funding platforms and blockchain technologies are a case in point. Crowd-funding platforms, for example have gained widespread attention and growth over the previous few years. At the central bank of the UAE, we started developing regulations in this regard in 2016 in order to safeguard the financial system and protect consumers, this project is at a final stage,” he concluded.