On 8 June, the Saudi Arabia Monetary Authority (SAMA) announced that it had transferred funds to domestic banks through blockchain technology. The money was part of the central bank’s effort to inject SAR 50 billion ($13.3 billion) of liquidity into the country’s banking system announced last week.
According to the statement, the use of distributed ledger technology in the financial sector is part of the authority’s efforts to explore and experiment with various upcoming technologies. Indeed, the Saudi Arabian Monetary Authority is inclined to twiddle with any upcoming technology in order to keep pace with emerging global technology trends. The statement reads:
“SAMA is one of the pioneer central banks to experiment with blockchain technology for money transfers, this move was one of the key innovative initiatives launched by SAMA in its program to enable and develop Fintech in the Kingdom. This includes, among others: The Fintech Saudi Initiative in cooperation with the Capital Market Authority, the introduction of SAMA Regulatory Sandbox, and an array of digital banking services and payments.“
— SAMA | البنك المركزي السعودي (@SAMA_GOV) June 8, 2020
The adoption of blockchain technology in the finance sector is surging in the entire Middle-East region. Notably, earlier in the year, SAMA and the central bank of the United Arab Emirates (UAE) disclosed a joint digital currency dubbed Aber, that would be distributed in the local banks in the to Arabian nations.
Saudi Arabia Monetary Authority to explore emerging trends
Furthermore, the latest move by the Saudi Arabia Monetary Authority is a big declaration by the authority to the growing use of blockchain technology by central banks all over the world. Blockchain technology is known for its security and transparency traits, which SAMA experienced in the banking liquidation exercise.
In conclusion, the adoption of blockchain technology has been adopted by different central banks and financial institutions across the world. Just recently, a bank in Turkey successfully completed its first trade finance transaction using blockchain technology. Moreover, nearly 40 percent of fintech firms based in Hong Kong leverage blockchain technology.