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A Uniform Payments System for the GCC Single Currency The Gulf Integration Project

World Bank Payment System Conference May 29, 2007. A Uniform Payments System for the GCC Single Currency The Gulf Integration Project. Ali Alhomidan Saudi Arabian Monetary Agency “SAMA”. Agenda. Overview Achievements Payment Systems Committee Objectives Issues under discussion

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A Uniform Payments System for the GCC Single Currency The Gulf Integration Project

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  1. World Bank Payment System Conference May 29, 2007 A Uniform Payments System for the GCC Single CurrencyThe Gulf Integration Project Ali Alhomidan Saudi Arabian Monetary Agency “SAMA”

  2. Agenda • Overview • Achievements • Payment Systems Committee • Objectives • Issues under discussion • System options • Issues

  3. Overview • Cooperation Council for the Arab States of the Gulf was established in May 1980 (www.gcc-sg.org) • Member states: Bahrain, Emirates, Kuwait, Oman, Qatar, Saudi Arabia • Common social, economic and cultural background • Advanced payment system infrastructure • Active region with largest economy in the Middle East • Local and international bank presence (retail & corporate) • Funds transfers and large financial business exchange between GCC countries

  4. Achievements in Payments System integration • Standard RTGS format • GCC Net (ATMs / POS) Connection (one standard) • Operating rules and regulations • Banking Supervision • GCC website • On going cooperation with Monetary Union Committee • Connection between RTGS systems is planned

  5. GCC Payments System Committee • Payments System Committee (PSC) • Series of meetings and Workshops (1999–Present) • Research & Proposals • Task Forces • Payments system • Single currency payment system • ATM & Smart Card • Gulf networks connection The committees report directly to GCC-CB Governors

  6. Strategic Objectives • Identify a common payments system infrastructure appropriate to the needs of the GCC common currency • An operational RTGS payment system between all GCC countries by 2010. • Cross border payments between all financial sector participants via central banks • Liquidity transfers in common currency • Settlement of securities transactions • Money market transactions • GCC – ATM, POS and Credit Card settlements

  7. Business Objectives • Safe & reliable mechanism for settlement of common currency payments on RTGS basis • Increase efficiency of cross-border payments within the GCC area • Capable of processing both Interbank & Customer payments • Support common currency monetary policy • Compatible with national payments systems of member states • Appropriate for the business needs of the region • Capable of further development in line with growth in use and needs of the common currency

  8. PSC – issues under discussion • Proposing GCC - RTGS connection options (the strategy) • The current RTGS system • Continues effort to collect the user requirements • Risk & Change Management • Collateral Policy • Business Cycle and GCC - RTGS harmonization • Development methodology / Project management • Consultancy assistance • The serious involvement from all stakeholders

  9. International Cooperation • Bank of International Settlement (BIS) • World Bank (WB) • International Monetary Fund (IMF) • European Central Bank (ECB) • Arab Monetary Fund (AMF) Other education and learning activities • Workshops & Seminars • Conferences, and awareness campaigns • Shared visits to each country in GCC region

  10. GCC RTGS Options • Fully integrated system • Single system for all payments in the GCC • Semi-centralized GCC RTGS system • Central system with National systems linked to centre • Fully distributed system • National systems inter-linked multilaterally with no central system

  11. Connection Strategy “under discussion” 1. Fully Integrated System 2. Semi-Centralized System 3. Fully Distributed System

  12. Fully Integrated – Option 1 UAE Saudi Arabia Kuwait Single GCC RTGS System Qatar Bahrain Oman

  13. UAE Kuwait Saudi Arabia Qatar Bahrain Oman Semi-Centralized – Option 2 RTGS RTGS RTGS Integrated GCC RTGS System RTGS RTGS RTGS

  14. UAE Kuwait Saudi Arabia Qatar Bahrain Oman Fully Distributed – Option 3 RTGS RTGS RTGS RTGS RTGS RTGS

  15. Issues • Collecting the detailed GCC payment system requirements • Commitment of resources • Stake holders...(convincing) • Single currency group movements (parallel movements) • Frequency of meetings and time allocated • Time constraint to achieve the “go live”

  16. Thank Youa_homidan@sama-ksa.org

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