Saudi Central Bank Collaborates on Innovative Cross-Border Payments Infrastructure
In a groundbreaking move, the Saudi Central Bank, also known as SAMA, has teamed up with international financial institutions and central banks to develop a cutting-edge cross-border payments infrastructure.
SAMA announced its participation in the Bank for International Settlements’ mBridge project, joining as a key player in the Minimum Viable Product platform.
The MVP platform, a Wholesale CBDC system, is a pioneering multi-central bank digital currency system designed to streamline cross-border payments between commercial banks across different regions.
This marks a significant milestone as the first multi-wCBDC platform to progress to the MVP phase of development.
Global Initiative for Enhanced Cross-Border Payments
During Saudi Arabia’s presidency of the G20 in October 2020, a global roadmap was established to enhance cross-border payments on a worldwide scale. The goal is to make transactions cheaper, faster, more inclusive, and transparent.
The roadmap includes an assessment of proposed local designs for digital currencies by various central banks and experimentation with their application in cross-border payment settlements.
SAMA has been actively exploring the potential of wholesale CBDC through policy analysis to determine the system’s viability in enhancing cross-border payment efficiency between commercial banks.
Revolutionizing Cross-Border Payments
Project mBridge, a collaborative effort initiated in 2021, involves the BIS Innovation Hub, the Bank of Thailand, the Central Bank of the UAE, the Digital Currency Institute of the People’s Bank of China, and the Hong Kong Monetary Authority.
The project aims to address key inefficiencies in cross-border payments, such as high costs, slow processing times, and operational complexities. It also focuses on promoting financial inclusion, especially in regions where correspondent banking has declined, leading to additional expenses and delays.
By establishing multi-CBDC arrangements that link different regions through a unified technical infrastructure, there is tremendous potential to enhance the current system and enable immediate, affordable, and universally accessible cross-border payments with final settlement.