Saudi Arabian Central Bank Deploys Blockchain Techhnology to Interact With Local Banks

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Mon, 06/08/2020 - 13:02
Vladislav Sopov
A central bank digital currency, or CBDC, is the most widespread use-case for financial authorities in terms of blockchain, but not the only one
Cover image via stock.adobe.com
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Saudi Arabian Monetary Authority (SAMA) has moved part of its liquidity injections to a blockchain-based system. This may revolutionize the way a central bank interacts with local banks.

Support by blockchain

In accordance with the official announcement from SAMA, a significant portion of liquidity for local banks will be transferred through blockchain-based instruments. SAMA will inject this liquidity to support local banks and to enhance their capabilities in delivering credit services.

Image via Twitter

It is highlighted that this step is the next stage of the KSA financial authorities' experiments with cutting-edge technologies. Also, this novelty is crucial in terms of the global adoption of distributed ledger technologies in the financial sector.

SAMA is taking part in a multi-purpose program designed to increase the role of blockchain-based public and banking services in KSA. This program facilitates the technical, marketing and regulatory progress of the blockchain sector.

E.g. SAMA launched The Fintech Saudi Initiative in cooperation with the Capital Market Authority and implemented the SAMA Regulatory Sandbox for decentralized financial instruments.

Central banks around the globe are considering CBDCs

The decision of SAMA is a textbook example of progressive state interest in the implementation of blockchain technologies in the traditional banking segment.

For instance, The Bank of England collaborates with the European Central Bank and The Bank of Japan in researching the features of central bank digital currencies. 

Using CBDCs in cross-border transactions is in the spotlight on the working group's agenda.

Also, an Ethereum-based stablecoin is being tested by the Australian central bank as a payment tool. The Royal Bank of Australia describes the instrument as a 'private, permissioned Ethereum network'.

 

About the author

Blockchain Analyst & Writer with scientific background. 5+ years in IT-analytics, 2+ years in blockchain.

Worked in independent analysis (Crypto Briefing) as well as in start-ups (Swap.online, Monoreto, Attic Lab etc.)

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