Reports coming from the United Arab Emirates’ say the UAE Central Bank and Saudi Arabian Monetary Authority (SAMA) will jointly issue cryptocurrency for use in cross-border transactions.
“This will be the first time ever to witness the cooperation of monetary authorities from different countries. We hope this achievement will foster similar collaboration in our region,” UAE Central Bank Governor Mubarak Rashid al-Mansouri was speaking to Gulfnews.
The Saudi and UAE central banks will rely on blockchain technology to develop the new cryptocurrency, though it will ultimately be limited to inter-bank transactions and not extend to consumer usage.
No launch date was provided and some cryptocurrency experts are skeptical the initiative will get off the ground.
Nassar Achkar, CEO of the Dubai-based Hyperchain, a blockchain technology service, declined to comment on the Gulf News report specifically but believes the governments of both countries are becoming more open to digital currencies.
In the past, the UAE Central Bank declined to endorse digital currencies like bitcoin, arguing it could be used to finance terrorism and other illicit activities.
Likewise, Saudi Arabia previously warned that cryptocurrency trading should be avoided because it remains unregulated.
Dr. Alex Coman, a researcher at the Interdisciplinary Center Herzliya’s Adelson School of Entrepreneurship, is similarly skeptical about the plan.
“Dubai is paving way for checks and balances and is regulating the industry. Banks are relying on the use of technology such as cryptocurrency for its fastness, efficiency and more transparent,” Achkar told The Media Line.
“I see great value in having a platform for international business. We’re on the brink of a revolution because right now if you want to transfer money across the border you pay very high commission. Transactions are going to be much smoother and much cheaper,” he concluded.
This looks like a lazy public relations initiative,” he conveyed to The Media Line. “Why 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.
He further explained the reasons behind many governments’ reluctance to fully embrace blockchain technology.
“In general, they oppose cryptocurrency since it is an excellent platform for hiding money. Switzerland and the Channel Islands, among others, are no longer available as tax havens so as a result cryptocurrency is the first-rate solution,” explained Dr. Alex Coman.
Businesses, Dr. Coman elaborated, will increasingly turn to these new digital currencies to circumvent the exorbitant fees and bureaucratic processes involved in international banking transactions.