Thanks to the recent interview granted by the Head of Innovation at Saudi Arabian Monetary Authority (SAMA), Mohsen Al Zahrani, one year after Ripple (XRP) blockchain technology signed an agreement with the former. The dialogue birthed some clarifications about the partnership between both institutions.
The SAMA representative stressed that it is not the responsibility of the KSA Central Bank – SAMA, to use Ripple blockchain technology but other commercial banks.“We (central bank) don’t implement Ripple technology,”Al Zahrani said.
Reason SAMA Will Not Adopt Ripple (XRP)
The assertion from the Head of Innovation at SAMA ignited series of confusion and derogative feelings in the space, especially from lovers of the blockchain technology.
While many felt SAMA probably had some beef for the technology, some believed the strict law and policy of the Islamic country is a major underpinning factor.
Nevertheless, SAMA doesn’t have any beef for the technology, and since it is a central bank, it will never have reason to compete with Ripple (XRP) and many banks feel.
Also, the like of Stellar Lumen (XLM) has shown to us that blockchain can work effectively without any tackle in Islamic countries with the help of Sharia compliant certificate. Stellar, last year became the first Sharia compliant cryptocurrency. Similarly, Ripple has also been endorsed by some Islamic countries around the world to help smoothen their cross border transaction.
However, the fact that SAMA in Saudi is likened as the central banks of other western world makes it unable to perform commercial or retail activities. Retail customers do not transact in government banks but Commercial banks.
SAMA is a government bank that serves as the bank of banks. SAMA is similar to the likes of Bundesbank in Germany, Banco de México (in Mexico) and Federal Reserve (in the US), amongst others. In banks like this, money transfer can never be done by individuals or cooperate bodies. They only work with domestic banks.
Why Is This A Boost For Ripple (XRP) Blockchain Technology.
Even though it has been previously declared publicly that SAMA and Ripple (XRP) have signed an official deal, the latest update looks puzzling and devastating, but Al Zaharani cushioned the bad effect. Al Zaharani said despite not adopting Ripple (XRP), SAMA is working progressively to promote the blockchain technology by evangelizing its adoption.
SAMA, in its power will continue to implore and sensitize other commercial banks in the region and beyond to use Ripple (XRP) blockchain technology for their remittance transactions. Thus a better offer than SAMA using the technology alone.
Al Zahrani added that through its promotional strategies for the technology, two domestic banks in the region will adopt Ripple before the end of 2019 Q 1 to eliminate friction in international transfers.
In line with the above, Dilip Rao, head of Ripple (XRP)’s infrastructure innovation, in February 2018 said:
“Central banks around the world are leaning into blockchain technology in recognition of how it can transform cross-border payments, resulting in lower barriers to trade and commerce for both corporates and consumers. SAMA is leading the charge as the first central bank to provide resources to domestic banks that want to enable instant payments using Ripple’s innovative blockchain solution.”