Organizing the Saudi Arabia's monetary policy, SAMA announced that they recently applied to blockchain technology for money transfers and deposits. The move is part of the financial authority's plan to keep up with digital currencies.
Following the technology with blockchain
The institution is about to use blockchain technology to capture the digital finance world. SAMA has stepped into a new area in its development plan by implementing blockchain for money transfers with several local banks in the country.
SAMA previously used distributed ledger technology (DLT) to deposit some of the liquidity it injected into the banking industry. This is part of SAMA's efforts to increase the banking sector's ability to effectively provide credit facilities.
According to a recent statement, the authority plans to investigate emerging technologies, try and be close to the global trends of central banks while evaluating the impact of blockchain on the financial sector.
A permanent step in the digital currency world
The start of the use of blockchain technology for money transfers can be considered as a logical step in the adoption of the fintech culture in the country.
In 2019, SAMA announced that they had launched the digital currency project "Aber" together with the United Arab Emirates Central Bank (UAECB). At that time, the financial institutions of both countries announced that the new digital product would be “to be used in financial settlements between blockchain and distributed ledger (DLT) between Saudi Arabia and the UAE”.
The joint project terms included the issue that SAMA and UAECB will focus on developing technical aspects in the early stages. It was also stated that “The use of the currency will be limited to a limited number of banks in each state”. "In the absence of any technical obstacles, economic and legal requirements will be taken into account for future use," said the phrase.
With the pilot initiative, it was announced that it is aimed to benefit everyone local and national by providing opportunities for cross-border workers to send money.