Saudi Arabia’s central bank on a switch to digital currency; signs blockchain deal with US-based Ripple

Charles Abuede

Few months after Mubarak Rashed al-Mansouri, the United Arab Emirates central bank governor revealed that the UAE central bank is working assiduously with the Saudi Arabia’s central bank to issue a digital currency that would be accepted in cross-border transactions between the two countries, the Saudi’s apex bank has entered into a blockchain agreement with United States’ Ripple.

The deal according to the central bank, is to help banks in the kingdom settle payments using the Ripple software as the Gulf regulator begin to explore new forms of financial technology. This becomes the first to be launched any country’s central bank across the globe as it will allow banks to instantly settle payments sent in and out of the kingdom using the Ripple blockchain software.

Ripple in a statement on the agreement said, “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.”

However, with scepticism hovering across the country’s fintech space following the fears of most regulators in the country, the central bank of Saudi Arabia began warning citizens against Bitcoin trading owing to the fact that it was outside of the central bank’s regulatory reach. But Bahrain, a major financial centre of the country, keen to boost its role as a regional financial centre has been exploring the use of digital currencies. Meanwhile, the past months have seen some regulators across the larger Gulf economies following the footstep of Bahrain on the digital currency use.

In a related development, the Abu Dhabi international financial centre regulator has hinted that it might create guidelines for the handling of the virtual currency by various exchanges.