The United Arab Emirates and Saudi Arabia have started using fintech for cross-border settlements, including a digital currency which they jointly developed for that purpose, the UAE’s central bank governor said on Wednesday.
Mubarak Rashed al-Mansouri, speaking at a financial technology conference in Abu Dhabi, also said the UAE central bank was working on a strategic plan to develop fintech which would be supported by a legislative and regulatory framework.
Mansouri said fintech could play a major role in improving financial inclusion — the provision of affordable financial services across the economy — and noted that the legal mandate of the central bank now included fostering financial inclusion.
For the joint digital currency, the UAE and Saudi central banks have launched a distributed ledger “proof of concept” system to facilitate cross-border settlements, he said. The digital currency is backed by fiat currencies of the two nations.
“We hope that the potential success of this initiative will foster similar collaboration in the GCC (Gulf Cooperation Council) region and globally,” Mansouri said.
Meanwhile, the UAE central bank has issued regulations for stored value facilities (SVFs), setting out requirements for consumer-focused digital payment services, he said. SVFs are a form of prepaid electronic cash or card.
Mansouri added that the central bank was finalizing its crowdfunding rules, which would protect consumers when crowdfunding platforms began to play a bigger role in the UAE.