Saudi Arabian Monetary Agency “SAMA” 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 System options Issues

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 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

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

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

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

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

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 You a_homidan@sama-ksa.org