This is not the first time that two countries want to create a cryptocurrency in order to facilitate commerce between nations. Saudi Arabia and the United Arab Emirates (UAE), are planning to create a digital currency that would make cross-border transactions easier between these two countries.
A Digital Currency to Increase Commerce
According to local media, the cryptocurrency will be based on blockchain. When the commerce between these two countries is increasing and highly interdependent, having a common virtual currency for transactions it will make commercial relations easier.
“It is just a study between the UAE and Saudi Arabia and have not gone deeper into it. We have not put a framework when the study will be completed and who will be involved from both parties,” said Mubarak Al-Mansouri, the governor of the Central Bank of the UAE.
Commerce between these two countries, that has grown really fast in the last 20 years, suffers from inefficiencies and friction from the traditional cross-border payment methods. As they manage more than $15 billion dollars annually, they need a faster and easier method to transact.
“This is probably the first time ever that we witness this cooperation between monetary authorities from different countries on this topic, and we hope that this achievement will foster similar collaboration in our region,” Mr Al-Mansouri said.
At the moment, these digital currencies will apply for transactions between the central banks and not within normal enterprises. If the governments accept it and create flexible regulations, the currency could be sued by the rest of the society.
Not the First National Cryptocurrency
Different countries thought about issuing a national cryptocurrency. Among them we can think about Russia, Estonia or Venezuela. All of them have their own reasons to create a digital currency, but the main reason is to facilitate transactions.
Japan and South Korea have also been working together in order to develop a new payment system and include a digital currency. These two countries were working with Ripple and its network that offer faster payments than Bitcoin and other cryptocurrencies and also work with other kinds of assets (not only money).