UAE, Saudi Arabia central banks disclose report on project Aber CBDC trial. On November 29, central banks from two of the most strong economies in the Middle East released a study on the yearlong Joint Central Bank Digital Currency (CBDC) project—and the results speak beautifully of blockchain technology.
Project Aber, initially announced in January 2019, was a joint effort between the United Arab Emirates and Saudi Arabia to establish a “proof of concept” designed to “contribute in the body of knowledge in CBDC and DLT technologies.”
The combined efforts of two central banks in such a study are among the first of its kind. To this end, the report states that the choice of name in “Aber” referred to the central mission of the project:
“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.”
Divided into three distinct stages, that gradually extended the scope of the trial to six different commercial banks, the study states that the project used a digital currency backed by real money to force “greater consideration” of security concerns and existing payment systems.
The report concludes 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.”
Ultimately, the Project Aber cleared all hurdles, which are “The key requirements […] were all met, including complex requirements around privacy and decentralization, as well as requirements related to mitigating economics risks, such as central bank visibility of money supply and traceability of issued currency.”
The report recommends 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 expanding the scope of future Project Aber trials to include more geographically dispersed partners as well as the settlement of other assets, such as bonds.
Although none has made as much headwind as Project Aber, in recent months, other central banks have also started to research the feasibility of CBDCs. Most recently, China has recently published regulatory guidelines legitimising a digital yuan, the United Kingdom has similarly begun drafting legislation and proposing research into a potential CBDC, and Brazil’s Economics Minister has definitively announced that the South American super-power will have a CBDC.
[image: Denis Harschi]