Saudi Arabia trials blockchain process for bank to bank money transfers

The SAMA used blockchain to deposit part of their liquidity in the banking sector as part of a goal to experiment with emerging technologies

The Saudi Arabian Monetary Authority (SAMA), Saudi Arabia’s central bank, recently used blockchain technology to inject liquidity into local banks.

SAMA made the announcement via a Twitter post yesterday, to explain the central bank’s objectives for 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 instruments powered by blockchain technology to enhance its monetary options. The cash will then be provided to local banks, with the goal of helping them enhance their capabilities to deliver credit services.

“This action comes as a part of SAMA’s continued efforts in exploring and experimenting emerging technologies and keeping lead pace with the global trends of central banks in assessing the impacts of such technologies on the financial sector.” the announcement read.

The announcement claims that SAMA is “one of the pioneer central banks to experiment blockchain technology for money transfers.” Other initiatives related to blockchain and fintech are the Fintech Saudi Initiative, in cooperation with the Capital Market Authority; the introduction of the SAMA Regulatory Sandbox, and a variety of new digital banking services and payments.

Central banks around the world have displayed an increased willingness in leveraging the benefits of blockchain technology to make their monetary transactions more secure and transparent. One project that several central banks are actively exploring is the use of blockchain solutions to issue central bank digital currencies (CBDC).

On May 21, the Central Bank of France announced a successful trial of its blockchain-powered digital euro. In the same line of thought, the Central Bank of South Korea is also looking into the adoption and advancement of CBDCs across different central banks around the world.

Interest in CBDCs is partly fueled by the coronavirus pandemic, as governments search for ways to mitigate the risk of spreading the virus.