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UAE and Saudi Arabia to work together to create a cryptocurrency for cross-border transactions

UAE and Saudi Arabia are working together to create a cryptocurrency for cross-border transactions.

The use of cryptocurrencies in the Muslim world, especially in the Middle East, has been a topic of intense debate over the past few months. Just this week, however, the two most influential economies in the region appear to have taken steps to validate the cryptocurrency technology and its place in the regional and international monetary frameworks. This verification focuses on the technical utility of cryptocurrency.

Multinational banks encrypt money

On December 13, 2017, there are reports that two Middle East superpowers are jointly creating and distributing digital currencies, namely the United Arab Emirates and Saudi Arabia. Specifically, it brings together the central banks of each country to create a common framework for this digital currency.

The digital currency to be established is reportedly based on blockchain technology and is designed to be a tool to facilitate cross-border transactions between the two countries.

The United Arab Emirates and Saudi Arabia have established good, large-scale import-export relations. Saudi Arabia's total exports to the UAE were $ 6.74 billion and the reverse figures (UAE's exports to Saudi Arabia) totaled $ 8.5 billion.

Transactional frictions, using cash or even digital cash as a transaction, have long been a problem of cross-border payments, and they multiplied when total annual spending hit $ 15.2 billion. Therefore, it is reasonable to move to blockchain-based cryptocurrencies. Although so far some areas do not support the technology, they inevitably face the same problems.

In a speech, Mubarak Rashed al-Mansouri, governor of UAE Central Bank, said:

"This is the first time that the monetary authorities of the two countries have used blockchain technology ... This is the digital reform that we have made between the central bank and the banks."
It remains to be seen how this move will affect the use of cryptocurrencies by individuals in these regions, as it is currently a matter of transactions involving the Central Bank. However, over time, the government's easing of cryptocurrencies is likely to infiltrate the general public.