A new digital currency is to be launched later this year targeting commodities owners in emerging markets seeking access to United States dollars.

Freedium, which is currently headquartered in Switzerland but which will have its operational base within Dubai Multi Commodities Centre, has said that the digital currency will be based on blockchain technology and will track the U.S. dollar in a bid to ensure stability of the currency.

The company announced the launch of the currency at the Dubai Blockchain Forum on Monday and said that it is targeting the provision of financing to commodity owners in the Middle East, Latin America and Asia. The company said in a statement announcing its launch that it plans to issue its first Freedium coin, the digital currency platform tracking the dollar, by the final quarter of the year. It said that it had chosen Dubai as its operational base because "it is the leading hub for emerging and developing economies", and that Dubai has been an advocate of the blockchain technology.

In the statement, Keba Keinde, who is co-founder and chairman of Freedium and also chairman of the Dubai-based Millennium Finance Corporation, said that Freedium has "set out to create a financially-inclusive ecosystem that would enable people from emerging and developing countries to access financing and banking services to send, receive and store money in a stable and fully-backed digital currency".

In a report also published on Monday, ratings agency Moody's said that blockchain technology has the potential to significantly reduce the time and costs that cross-border transactions take, which could increase banks' efficiency but put pressure on the fees and commissions they charge.

Colin Ellis, Moody's managing director of credit strategy and the report's co-author, said: "Banks could benefit significantly from the development and implementation of blockchain technologies in terms of enhanced efficiency, cost savings and risk reduction.

"But the adoption of these technologies will also limit processing fees, commissions and gains on foreign exchange transactions, which will pressure revenue."

He said that Swiss banks would be most exposed as they currently earn about 50 percent of revenue from fees and commissions. In general, banking systems with significant cross-border transactions - such as the UK, Switzerland and Belgium - will be hardest hit, Moody's argued.

The Dubai government is attempting to introduce the blockchain technology to a range of transaction processes, it has said, in a bid to make the provision of government services more efficient, and Dubai Multi Commodities Centre - the city's largest free zone and master developer of the Jumeirah Lake Towers district - began issuing new trade licences for cryptocommodities in December.

 

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(Writing by Michael Fahy; Editing by Yasmine Saleh)

 

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