Yesterday the Saudi Central Bank (SAMA) and the Central Bank of the UAE published the results of their joint central bank digital currency (CBDC) experiment, Project Aber. First announced two years ago, the central banks claimed their wholesale CBDC experiment had novel features, but one aspect stood out. One might have expected two CBDCs, one for each currency. Instead, there was a single CBDC issued by both central banks. And it wasn’t a basket currency.
That works because both the Saudi Riyal and UAE Dirham are pegged to the U.S. dollar at the same exchange rate. Hence it’s not surprising that different interest rate policies in each country and monetary policies came up as topics for further exploration.
Another novel feature highlighted was the use of real money. However, it wasn’t viable to use real commercial transactions because of legal practicalities, so instead, synthetic transactions were used.
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