SAMA used blockchain to place part of its liquidity with banks as part of an experiment with emerging technologies
The Saudi Arabian Monetary Authority (SAMA), the country’s central bank, recently employed blockchain technology to inject liquidity into local banks.
In a post shared on Twitter yesterday, SAMA outlined the objectives behind the project.
#SAMA Deployed Blockchain Technology for Money Transfer with local banks.https://t.co/sfI5FHt8NQ#مؤسسة_النقد pic.twitter.com/TweNEpXEF4
— SAMA | مؤسسة النقد العربي السعودي (@SAMA_GOV) June 8, 2020
Specifically, SAMA used blockchain-based instruments to broaden its monetary options. The funds were then provided to local banks to help strengthen their capacity to extend credit.
“This action is part of SAMA’s ongoing efforts to explore and experiment with emerging technologies and to follow global central bank trends in assessing the impacts of these technologies on the financial sector,” the announcement said.
The statement adds that SAMA is “one of the first central banks to experiment with blockchain technology for money transfers.” Other blockchain and fintech initiatives form part of the Fintech Saudi program in cooperation with the Capital Market Authority, aiming to introduce a regulatory framework from SAMA and to launch a variety of new digital banking and payment services.
Central banks worldwide have shown growing interest in leveraging blockchain’s advantages to make monetary transactions safer and more transparent. One project many central banks are actively exploring is the use of blockchain-based solutions to issue Central Bank Digital Currencies (CBDCs).
On May 21, 2020, the Bank of France announced it had successfully tested a digital euro using blockchain. Similarly, the Bank of Korea is also studying CBDC adoption and development alongside other central banks around the world. Interest in CBDCs has been partly driven by the coronavirus pandemic, as governments seek ways to reduce the risk of viral transmission.
Translated by Carolane de Palmas