Project "Aber" aimed to provide a proof of concept to evaluate the feasibility of issuing a central bank digital currency for central banks to improve cross-border payments and reduce transfer times and costs between banks. The project was also meant to experiment with technologies such as distributed ledgers.

The two entities said that the results showed that the distributed ledger technology would enable central banks to develop payment systems at both local and cross-border levels.

The report on the project said:

"The project was successful in achieving its key objectives which include using a new DLT-based solution for real time cross-border interbank payments between commercial banks without the need to maintain and reconcile Nostro accounts with each other. This promises to address the inefficiency and costs that are inherent in existing cross-border payment mechanisms.

"In Aber, we were able to make a number of significant changes to the status quo of cross-border payments. Firstly, by creating a common CBDC for use between jurisdictions, we removed the need for Commercial Banks to maintain nostro accounts with their various cross-border counter-parties. Secondly, we implemented a system that, whilst requiring the Central Banks to issue and redeem CBDC, didn''t require the Central Banks'' systems to be running in order for cross-border payments to continue as this function was then distributed across  all the participating Commercial Banks (whilst still ensuring that settlement finality, privacy, and other considerations are met). Thirdly, the role of the Central Banks evolved in that they maintained nostro accounts with each other that was then used to fund the redeemed CBDC (when that CBDC was originally issued by that particular Central Bank)."

SAMA and the UAECB announced the launch of a common digital currency for use in financial settlements between the two countries through blockchain and distributed ledger technologies.

The proof-of-concept, nicknamed project "Aber", aims to study the feasibility of modern technologies through practical implications, how they can help improve and reduce remittances costs and to assess technical risks and how to deal with them.

The project will also establish an additional means for the central financial transfer systems of the two countries and enable banks to directly deal with each other in conducting financial remittances.

According to the statement, the two banks opted for a joint project because although the two countries have central systems for remittances and domestic transactions that have evolved over time and proved their feasibility, "there are still some aspects of international remittances that need further development".

"The project will also enable considering the possibility of using the system as an additional reserve system for domestic central payments settlement system in case of their disruption for any reason," the banks said.

In the initial stages of the project, the focus will be on testing the technical aspects, with the digital currency restricted to “limited” banks in each country.

If no technical obstacles are encountered, “economic and legal requirements for future uses will be considered,” according to the two institutions.

The Standing Committee for Awareness on Dealing in Unauthorized Securities in the Foreign Exchange Market has warned against trading in digital currencies because of "their negative consequences and high risks on traders as they are out of government supervision".

It added:

"The committee assured that virtual currency including, for example but not limited to, the Bitcoins are illegal in the kingdom and no parties or individuals are licensed for such practices."

The statement also cautioned Saudi residents about pursuing "illusion and get-rich scheme[s]" as cryptocurrencies carry high regulatory and security risks, not to mention the risk of fraud.

However, the statement does not explain what the penalties are for those found to be trading in cryptocurrencies.

The standing committee was formed by a supreme decree headed by the Capital Market Authority (CMA), the Ministry of Ministry of Interior Membership, the Ministry of Media, the Ministry of Commerce and Investment and the Saudi Arabian Monetary Authority (SAMA), the country's de facto central bank.

The standing committee's remit is to reduce the marketing for investment and trading in virtual currencies by reporting any activity to SAMA or the CMA.