In order to boost blockchain and digital currency adoption in the country, the National Bank of Egypt NBE has joined forces with the R3 Blockchain Consortium on April 22, 2018. R3 is a software enterprise firm which is currently working with more than 200 financial institutions to create a blockchain platform dedicated to commercial use.
The move of NBE has opened new doors for the bank to engage with other financial institutions. Being the member of R3, it will work with partner firms to commercial applications of blockchain technology. Moreover, the bank will have the opportunity to share space with premier financial institutions which will help it understand the basics and new developments in the distributed ledger technology.
NBE’s staff will be trained to work with Corda, an open source blockchain project developed by R3. NBE chairperson, Hisham Okasha, said, “By joining this initiative together with world banks and companies, we will be able to closely monitor and engage directly in global blockchain developments. We can better assess the value this technology can bring to the banking industry and the impact it can have on faster and more cost-effective services to our customers for future implementation.”
On the other hand, David Rutter, CEO R3, said, “The addition of the National Bank of Egypt to our ever-growing Corda network enhances our engagement with the global financial industry, particularly in the MENA region. Our partners are developing cutting-edge blockchain applications on Corda that will change the way the world does business.”
On January 9, 2018, the Central Bank of Egypt warned citizens against dealing in any digital currency. According to the press release virtual currencies do not have any natural value as the government does not back them. It stressed that only the national currency of Egypt should be considered the legal tender in Egypt. The statement claimed that use of cryptocurrencies would harden the task of financial regulators.
Meanwhile, being hopeful of the new partnership, the team at R3 said, “Realizing early on that traditional public blockchain technologies were not the right starting point for the problems we aspired to solve in business, we rethought the blockchain concept from top to bottom and uncovered a revolutionary new approach to linking businesses that massively reduces cost, risk, and duplication.”
Corda was developed after two years of hard work by the members of the R3 blockchain technology consortium. It continued, “Corda records, manages and executes institutions’ financial agreements in perfect synchrony with their peers, creating a world of frictionless commerce.”
Digital currencies have faced a tough period in Egypt since its genesis. Earlier this year the Grand Mufti of Egypt, Shawki Allam, released a fatwa, a ruling on the point of Islamic law given by a recognized authority, against virtual currencies. He acknowledged them as ‘un-Islamic’ and forbidden as per the Sharia laws. Some other Islamic scholars, in Southeast Asia have termed digital currencies as Islamic, suggesting that they have underlying value like gold.
It is possible that Shawki Allam was motivated due to the bad reputation digital coins hold for assisting illegal activities and ignoring the governing financial laws.