Saudi Arabia's central bank signs deal to use Ripple

The bank has signed a deal with the cryptocurrency to settle payments using blockchain software

Saudi Arabia’s central bank has signed a deal with US-based Ripple to help banks in the kingdom settle payments using blockchain software, as Gulf regulators begin to explore new forms of financial technology.

The pilot program is the first of its kind to be launched by a central bank, allowing banks in Saudi Arabia to use Ripple’s software to instantly settle payments sent into and out of the country, the company said late on Wednesday.

This will allow Saudi banks to make faster, cheaper and more transparent cross-border transactions, Ripple said, adding that the central bank would provide training to Saudi banks interested in the program.

Most regulators in the Gulf initially expressed scepticism about fintech and last year the Saudi central bank warned citizens against trading bitcoin because it was outside the bank’s regulatory reach.

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But Bahrain, keen to boost its role as a regional financial center, has been exploring the use of digital currencies and in the last few months, regulators in some larger Gulf economies have followed suit.

The Saudi central bank is working with the United Arab Emirates central bank to issue a digital currency that would be accepted in cross-border transactions between the two countries, UAE central bank governor Mubarak Rashed al-Mansouri told Reuters in December.

Earlier this week, the regulator of Abu Dhabi’s international financial center said it might create rules for exchanges handling virtual currencies.