Saudi Arabia has announced that its state-managed cryptocurrency will be launched in association with the United Arab Emirates (UAE) next year as a solution for international payments.
Mohsen Al Zahrani, Head of Innovation at the Saudi Arabia Monetary Authority (SAMA), shared details of the cryptocurrency release with the Saudi Press Agency earlier this week where he disclosed the UAE’s contributions to development.
The country’s central bank, SAMA, will govern the management of the cryptocurrency, which will for now be limited for use by a small number of banks making cross-border payments.
Local news outlet Agraam reports that Al Zahrani disclosed at the Blockchain Future Applications conference Tuesday that SAMA is studying the feasibility of rolling out the use of the cryptocurrency for all national banks.
The Governor of the Central Bank of the UAE, Mubarak Al-Mansouri, told Agraam that the digital currency has progressed to the design stage, with the exact date of its launch dependent on the speed at which research and development can be completed.
With its use restricted to bank-to-bank payments, Al-Mansouri says that the cryptocurrency will not be a replacement of cash and will not be used to purchase goods but rather is a ”new payment tool used by banks and not individuals”.
It will be interesting to see then how exactly it will fit with the definition of a cryptocurrency rather than just a blockchain payment system, particularly if its value is pegged to the Saudi dinar.
Saudi Arabia’s announcement comes after International Monetary Fund (IMF) Managing Director Christine Lagarde’s comments last week where she encouraged states to consider issuing central bank-issued cryptocurrencies.
Lagarde noted during her speech at Singapore Fintech Festival that she believed cryptocurrencies are paving their way in an ever-growing cashless world as the industry fights for legitimacy for digital currencies not only as a store of value but as cheaper, faster payment solutions.
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