A Uniform Payments System for the GCC Single Currency

The Gulf Integration Project

Ali AlhomidanSaudi Arabian Monetary Agency “SAMA”

World BankPayment System ConferenceMay 29, 2007

Agenda

OverviewAchievementsPayment Systems CommitteeObjectivesIssues under discussionSystem optionsIssues

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

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

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

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

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

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

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

GCC RTGS Options

1. Fully integrated system Single system for all payments in the GCC

2. Semi-centralized GCC RTGS system Central system with National systems linked to

centre

3. Fully distributed system National systems inter-linked multilaterally with

no central system

Connection Strategy “under discussion”

2. 2. Semi-Centralized SystemSemi-Centralized System

3. Fully Distributed System

1 .Fully Integrated System

Fully Integrated – Option 1

UAE

Single GCC RTGS System

Saudi Arabia

Qatar

Oman

Bahrain

Kuwait

Semi-Centralized – Option 2

UAE

Integrated GCC RTGS System

Saudi Arabia

Qatar

Oman

Bahrain

KuwaitRTGS

RTGS

RTGS

RTGSRTGS

RTGS

Fully Distributed – Option 3 

Saudi Arabia

UAE

Qatar

Oman

Bahrain

KuwaitRTGS

RTGS

RTGS

RTGS

RTGS

RTGS

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”

Thank Youa_homidan@sama-ksa.org