Central banks from two of the high-powered economies in the Middle East released a report today on an annual joint central bank digital currency (CBDC) project, and results speak glowingly of blockchain technology.
According to Cointelegraph, first announced in January of 2019, Project Aber was a joint effort between the United Arab Emirates and Saudi Arabia in order to establish a “proof of concept” designed to “contribute in the body of knowledge in CBDC and DLT technologies.”
According to the report, “The name Aber was selected because, as the Arabic word, for crossing boundaries, it both captures the cross-border nature of the project as well as our hope that it would also cross boundaries in terms of the use of the technology.”
Broken into three distinct phases that gradually expanded the scope of the trial to six different commercial banks, the report indicates that the project used a digital currency backed with real money in order to force “greater consideration” of issues surrounding security and existing payment systems.
The report concluded that a dual-issued CBDC was “not only technically viable” for cross border payments, but that CBDCs present “significant improvement over centralized payment systems in terms of architectural resilience.”
At last, the Project Aber cleared all hurdles: “The key requirements were all met, including complex requirements around privacy and decentralization, as well as requirements related to mitigating economics risks, like central bank visibility of money supply and traceability of issued currency.”
The report also proposes a number of next steps for research and policy, including adopting DLT to improve the security of existing systems, “offering a DLT-based payments rails,” and developing the scope of future Project Aber trials to include more geographically dispersed partners as well as the settlement of other assets, like bonds.