Some central banks have either begun to look for ways to integrate digital money into their operations or have already begun the process. Saudi Arabia’s Central Bank has entered into an agreement with US-based blockchain company Ripple. This announcement comes just a few months after the central bank Governor of the United Arab Emirate; Mubarak Rashed al-Mansouri made it known that the United Arab Emirate Central Bank is working hand-in-hand, as well as diligently with Saudi Arabia’s Central Bank to issue a digital currency that would be acceptable as a medium of payment in cross-border transactions between the two countries.
According to the apex bank, the deal will provide banks within the kingdom the assistance they need to settle payments using the Ripple software as the Gulf regulator, and is also a means of exploring new forms of financial technology. This automatically becomes the first of its kind as it will allow banks to instantly settle payments sent in and out of the kingdom using the Ripple blockchain software.
According to Ripple, “This will allow Saudi banks to make faster, cheaper and more transparent cross-border transactions, as the central bank would provide training to Saudi banks interested in the program”.
The fears of many regulators within the country have led to quite a large cloud of scepticism hovering around the country’s financial technology space. Because of this, the Central Bank of Saudi Arabia continuously warned citizens against trading Bitcoin because it was out of the regulatory reach of the apex bank.
Even though the central bank gave warnings, Bahrain, a major financial Centre of the country that is bent on boosting its role as a regional financial Centre of the country has been exploring the use of cryptocurrencies. Meanwhile, the past few months have seen some regulators across the larger Gulf economies following in the lead of Bahrain on the digital currency use.
Abu Dhabi international financial centre regulator in a related development, have given intimations that it might set guidelines for the handling of the virtual currency by various exchanges.
Cryptocurrency is here to stay afterall!