Praise be to Allah, Lord of the world and prayers and peace be upon our prophet Muhammad and his family and companions.
Your Excellences, ladies, gentlemen and dear guests. Peace, mercy and blessing be upon you. I would like to express my thanks and gratitude to Dr. Haifa Rida Jamal Al-Layl, President of the University for the Generous Invitation to participate in this conference, which contributes in increasing awareness of the financial services sector. Thanks are also extended to everyone participated in organizing this meeting.
The financial sector in Saudi Arabia is characterized by a high level of solvency, robustness and sophistication in the provision of services using advanced technology and according to international best practices and standards. So far, Saudi banks maintained a high level of profitability and capital. Furthermore, the kingdom continued to obtain high rates in the credit rating by international companies. All of that is credited to the balanced policies and prudent procedures applied by the Saudi Arabian Monetary Authority (SAMA) upon local institutions that it supervises. These policies reinforce the ability to invest in the future and positively interact with digital shifts in the financial sectors.
Recently, the economic policies in the kingdom has witnessed many developments, which aims to strength the economic structure, and to move towards a diversified and sustainable economy. Earlier this year, a plan was adopted to develop the financial sector to be diversified and effective that is capable of supporting the development of the national economy, stimulating saving, financing and investment. Further, it aims at enhancing efficiency and capability to encounter future challenges and achieve economic development goals emanating from the Kingdom vision 2030 and its related programs.
In addition to the main role of the institution in ensuring monetary and financial stability, the institution has worked over the past 30 years to develop the electronic financial payment systems. The kingdom was the first country in the Middle East to adopt a national payment system which is completely independent of international companies. The Saudi Network for Financial Payment (SPAN) was launched in 1990, while the system of real-time transfers and settlements (SARSIE) was developed in 1997.
In 2004, the national electronic payment system (SADAD) was launched and awarded the United Nations' Best Government Project in the "Service Improvement category". Because, the wheel of development never stops, SAMA launched (Atheer, Mada) for payment and eComerec, and (Mada-Pay) services on the smart phones, in addition to Esaal, which is a Business e-invoicing platform.
Despite the availability of services that can facilitate the use of electronic payment means, community's reliance on the use of liquid cash remains dominant. Therefore, the institution sought to encourage financial technology companies whether be independent or subordinate to banks with ample experience and knowledge to fulfill the needs of beneficiaries and to adapt their systems to suit beneficiaries' needs. Among these companies, are the payments providers and e-portfolios, which we anticipate to play a critical role in expanding the financial inclusion, reducing the use of cash, and diversifying innovative solutions.
The financial services sector opened its doors for the active parties such including the financial technology companies to stimulate innovation and growth. The institution has worked on developing the Regulatory Sandbox; structures and actions that enable the financial institutions and financial technology companies to test their innovative products in order to make a positive impact on the financial sector within the field of improvement and facilitation of financial procedure and cost reduction. Eight local banks were initially licensed to open accounts without the need to visit the branch. In addition, another eight companies were licensed to provide a variety of services in the field of digital payments. Moreover, SAMA has launched last April, The Saudi Fintech initiative to stimulate financial services technology sector and to promote its role in the social and economic development. This initiative combines public and private institutions including financial technology companies, banks, universities, investors, entrepreneurs and government agencies. The initiative aims at promoting the innovation culture and establishing meaningful connections in the financial services sector. The initiative also promote awareness of the financial technology role in reducing costs, finding the fastest solutions and providing means to support financial technology companies at every stage of their development. In this regard, the launch of this initiative comes as an incentive for the digital financial sector to work on making the Kingdom a center for the financial technology.
In light of the global changes that we are witnessing today, especially in the field of industrial revolution and modern digital technologies, many parties including central banks are monitoring the development of the so called 'encrypted assets, blockchain and Distributed books. Some of these central banks has already started to explore and experiment these technologies in order to reach a deeper understanding of their technical aspects, and study its impact on the legal and legislative aspects, monetary policies and financial stability.
In the past two years, SAMA has been keen to learn about these technologies and other countries' experiments. It has conducted numerous studies and started taking initiatives to identify these promising technologies. In the first quarter of this year, SAMA launched the Ripple Financial Technology Program, which is an agreement with Ripple, a financial technology company, to provide a pilot program for Saudi banks related to cross-border billing account technology, which is expected to reduce the cost of payments and improve customer experience. Some Saudi banks participates in exploring Ripple solutions. Noting that SAMA is managing the program and providing training and the technical support. In addition, SAMA has begun recently working with the United Arab Emirates Central Bank on a project to issue a digital currency and to use the blockchain technology for interbank payments in the Cross-border payments. This project provides an opportunity to study the technical infrastructure and the digital currencies; how they are going to be issued, traded, as well as matching and reconciliations. This pilot project aims to understand the technical and operational effects on the current structure. Other studies will coincide to determine the effect of issuing a digital central currency based on the monetary policies. The unified digital currency is a digitized and coded representation of the currency and does not replace the current official currency. It will be issued for all participated banks only and for carrying out limited operations in accordance with the pilot project program framework.
In conclusion, I would like to thank the President of the University for the Invitation to participate and thanks also is extended to you dear audience for the listening. I wish this conference all the success. Peace, Mercy and blessing of God be upon you.