Abu Dhabi: The UAE Central Bank has started work on a digital currency, together with the Saudi Arabian Monetary Authority (SAMA), in an effort to speed up financial transactions between the two countries.
UAE Central Bank governor Mubarak Rashid Al Mansouri said on Wednesday that it has started working with Saudi Arabia on a digital currency to speed up financial transactions between the two countries.
“[The] Central Bank of the UAE, in cooperation with Saudi Arabian Monetary Authority is working on a unique project based on blockchain technology to issue [a] digital currency to facilitate trans-border settlements,” Mubarak Rashid Al Mansouri, UAE Central Bank governor, told the Arab Fintex symposium that began on Wednesday in Abu Dhabi.
“We use digital currency that is supported by real currency in both countries. This might be the first time that we witness such cooperation in this front.”
If the project is successful, it will encourage similar cooperation at a GCC level and with the rest of world, he added.
“A distributed ledger proof of concept (PoC) to facilitate such cross-border settlements is already put into motion. The PoC’s design involve using digital currency backed by fiat currencies of the two nations.”
The comments come as Saudi Arabia and the UAE cooperate in different fields including energy, finance and other sectors to boost ties.
UAE-based banks are opening branches in Saudi Arabia and Adnoc Distribution recently announced the start of its operations in the kingdom with the opening of two service stations, one near Riyadh and the other one in the Eastern Province.
Speaking on the development of the fintech sector in the UAE, the governor said the central bank is working on a strategic plan to boost the sector. The plan will be supported by a regulatory and legislative framework.
“This road map will be underpinned by a balanced regulatory framework that protects consumers and maintains institutional safety and soundness on the one hand, but does not stifle innovation on the other,” Al Mansouri said.
The central bank of UAE will be working with multiple authorities, global and domestic payment providers and fintech firms to create consumer-centric, cost-effective and safe e-payment solutions.
The UAE Central Bank is also in the midst of finalising its regulations on crowdfunding, as well as a national payment systems strategy.
The national payment systems strategy aims to create a secure, future-proof payments ecosystem that supports the UAE digital economy and its objectives for a cashless society objectives, the governor said.
“To this end, the central bank of UAE will be working with multiple authorities, global and domestic payment providers and fintech firms to create consumer-centric, cost-effective and safe e-payment solutions.”
On crowdfunding regulations, he said the central bank is trying to provide regulatory clarity for the operations of crowdfunding platforms in order to strengthen necessary safeguards to ensure adequate consumer protection and robust disclosure requirements when such platforms serve the UAE market at a larger scale.
The governor also said the central bank is undertaking transformative changes to the consumer protection department for a clear focus on consumer protection, consumer education and awareness.
“As a central bank, we must always be mindful of our primary goal of maintaining both [the] safety and soundness of the banking system and adequate levels of consumer protection. And to that end, fintech presents both challenges and opportunities for consumers, financial service provides and regulators alike.”
Later interacting with the reporters, Al Mansouri said UAE banks are attracting more deposits from overseas, as well as government deposits.
He added that there was a strong liquidity within the UAE banking system