Cryptocurrency in Saudi Arabia Essay

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Hi The paper about the question below: 
– Would you recommend cryptocurrency trading and investment in cryptocurrencies in your country (Saudi Arabia)? Explain briefly why or why not. 
We did quit similar paper (attached) you can use and “”””Paraphrase”””” it , but focus more in this question. Below is the professor’s comment about the paper attached that you did. Not Necessary to reflect it in this paper but just to give you an idea of what mistake we done in that paper.  
((Good discussion, but very general. Like two others, it isn’t clear what YOUR user case is – retail or wholesale or cross border? Your Governor asked for you opinion, based on what you have learned in class. Without choosing A case, it is difficult to cover the subsequent ground, except in a high-level general way.))
Please High quality and time are very important, make sure you cite everything and use finance and economics terms.

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CBDC in Saudi Arabia
CBDC offers a critical infrastructure to complete payments between central banks, intercommercial bank payments, and cross-border payments between commercial banks in Saudi
Arabia. The CBDC guarantees financial inclusion and stable payment systems worldwide,
including countries with poor banking penetration. In addition, the CDBC arrangement is
transparent and potentially mitigates challenges such as money laundering and terrorism financing
typical with the uncontrolled private sector. CBDC allows the consolidation of digital records and
traces that enhance the application of regulations governing anti-money laundering and countering
the financing of terrorism, which is key in reducing informal economic activities. At the same
time, CBDC would support the evolving needs in the financial market, ensuring a stable and sound
system in compliance with legal, operational, and security requirements (Saudi Central Bank &
Central Bank of the U.A.E, 2020). Apart from creating value in the financial system, it can be
costly to the central bank.
A CBDC design can alter the “know-your-customer” function, forcing the central bank to
screen customers on behalf of commercial banks. In addition, the central bank has to manage
privacy and anonymity issues emanating from private transactions. For instance, there is no
practical framework for implementing anti-money laundering and countering terrorism financing
in anonymous forms of CBDC (Waller, 2021). These risks can easily translate to reputational costs
for the central bank in Saudi Arabia. Also, the decentralized digital currencies have many
participants and points of attack and risks associated with electronic bulk transfers that increase
operational risks. The prevalence of cyber threats such as malware and fraud in payment, clearing,
and settlement systems pose a significant operational challenge to CDBC in Saudi Arabia (Bank
for International Settlements, 2018). Unfortunately, technological advancement is yet to offer
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substantive solutions to this endemic problem affecting the credibility of the financial system.
Most importantly, the maturity of technology and the efficiency gains appear to be limited,
implying a negative effect on the use of wholesale CBDC in mixed economies.
Notwithstanding, CBDC is at the core of the financial system in the future, making it vital
for different stakeholders, including commercial banks and central banks, to collaborate in
ensuring it meets expectations. This collaboration facilitates the development of the financial
system by enhancing payment safe and secure payment options (Waller, 2021). For instance, using
CBDC to settle payments between central banks is similar to the traditional central bank reserves
in the interbank payment system. It can easily be actualized when commercial banks are responsive
to changes in the financial market and willing to promote market development by adopting new
payment methods. The efficiency of such a system requires suitable technological innovations
capable of enhancing convenience, increasing safety, lowering overall costs, and improving
resilience. These capabilities are vital in facilitating CBDC’s role in asset transfers, recordkeeping, authentication, and risk management in Saudi Arabia (Bank for International Settlements,
2018). Thus, the gains of introducing CBDC in Saudi Arabia’s financial system far outweigh its
costs in the long run.
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References
Bank for International Settlements. (2018, March). Central bank digital currencies. Bank for
International Settlement. https://www.bis.org/cpmi/publ/d174.pdf
Saudi Central Bank & Central Bank of the U.A.E. (2020). Joint Digital Currency and
Distributed Ledger Project. https://www.centralbank.ae/en/node/2382
Waller, C. J. (2021, August 5). A solution in search of a problem? [Speech transcript]. Federal
Reserve System, at the American Enterprise Institute, Washington, D. C.
https://www.bis.org/review/r210806a.pdf
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Cryptocurrency in Saudi Arabia

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