SAMA is currently researching the market preparedness, potential efficiency, and speed of applications for digital currency payment systems. Saudi Central bank is testing digital currency.
According to the Saudi Press Agency, the Saudi Central Bank, better known as SAMA, is experimenting with a central bank digital currency in collaboration with other financial institutions and fintech firms.
The concept is in line with global central banks’ efforts to produce widely accessible digital currency in order to safeguard privacy and financial security, reports Arab News.
Following the surge in popularity of cryptocurrencies, central banks began to consider this move, but with a legal cover to limit illegal usage of the otherwise unregulated digital currency.
According to the SPA report, SAMA is now researching the economic effects, market readiness, and possibly effective and quick uses for digital currency payment solutions.
Subscribe to GreatGameIndia
Prior to pushing forward with the project, the central bank wants to investigate policy issues as well as legal and regulatory issues.
According to SAMA Governor Fahd bin Abdullah Al-Mubarak, local banks and payment firms are an essential component of this venture and its execution.
He stressed the importance of involving banks and local fintech firms in the present phase of the initiative.
He also stated that it is critical to ensure the engagement of other market participants as well as third-party consulting and technical service providers in order to better understand the operations of digital currency and evaluate alternative design options.
The central bank will maintain this phase of the project while discussing with appropriate international agencies, local government agencies, and the general public, according to the top executive.
SAMA and the UAE Central Bank are also collaborating on a project dubbed “Aber” to assess the viability of establishing a digital currency to be used between the two central banks.
The goal is to create a cross-border payment system that will shorten transfer times and lower costs between banks in the two Gulf states.
After the Chinese digital Yuan prototype garnered attention, the number of countries where central banks have issued digital currencies has increased.
The banks intend to build technology, such as distributed ledgers, to manage digital currency between the two central banks and banks involved in the effort in Saudi Arabia and the United Arab Emirates.