On July 26, the Hong Kong Monetary Authority (HKMA) signed a memorandum of understanding with the Saudi Central Bank (SAMA) to tokenize the financial sector and build innovative payment tools. Under the MoU, the two countries agreed to work together on matters concerning financial innovation.
A review of the MoU revealed that SAMA and HKMA will engage in knowledge-sharing initiatives to foster financial innovation and growth of the fintech sector.
Hong Kong and Saudi Arabia Forms Alliance
In a wide-ranging meeting held in Riyadh, SAMA’s governor Ayman Alsayari struck the MoU deal with the chief executive of HKMA, Eddie Yue. The executives underscored the need to focus on emerging trends, including regulatory and compliance standards in the financial sector.
In addition, the executives agreed to join forces to shape the fintech sector. Besides signing the MoU document, the executives shared their latest research on emerging trends. Referring to the newly launched supervision technologies (Suptech), the officials mentioned the benefits of tokenization and improved payment infrastructures.
An announcement conveyed by the governor of SAMA revealed that the Saudi Arabian financial sector has grown exponentially. Alsayari restated that the Arab country has a growing number of new entrants yearly. He added that the region has strived to cope with emerging technologies by launching new services and innovations.
However, as the Saudi Kingdom seeks to become an international fintech hub, the governor stressed on the need to collaborate with other fast-growing countries. Alsayari acknowledged that HKMA has supported SAMA for quite a long time in matters concerning finance and innovation.
Significance of Fintech Sector
The executive anticipates that the MoU will strengthen ties between SAMA and HKMA in the future. He believes that the joint efforts will enable the two countries to develop innovative technologies and solutions for mutual benefit.
In support of Alsayari’s remarks, the HKMA CEO highlighted the potential gaps affecting trade and the economy of the Kingdom of Saudi Arabia and Hong Kong. The executive stressed the need to invest in sustainable development, fintech, and finance.
Yue stated that the MoU will encourage knowledge sharing between the two regulatory bodies. He believes that the cooperation between SAMA and HKMA will boost market connectivity in the Middle East and Asia.
In a press release, the two regulatory agencies agreed to strengthen their financial ties by focusing on four primary goals. According to the report, the two partners discussed several projects in financial infrastructure development and market connectivity. At the bilateral meeting, SAMA and HKMA, the regulators revealed plans to work on initiatives to open market operations and support sustainable development.
Importance of Mutual Cooperation Between Hong Kong and Saudi Arabia
Even though the report failed to outline the critical projects SAMA and HKMA will undertake, the two jurisdictions are trying to become a burgeoning center for crypto assets. Recently the HKMA announced plans to introduce new regulations allowing retail clients to buy and sell crypto assets.
The HKMA efforts aim at supporting the government to attract more foreign investors in the Hong Kong crypto sector. Consecutively the Kingdom of Saudi Arabia announced plans to explore the use case of the central bank’s digital currency (CBDC).
The announcement revealed that SAMA would collaborate with local banks and fintech to experiment with the use case of CBDC in the wholesale sector.
A few days ago, the Minister of Communication and Information Technology in Saudia Abdullah Al-Swaha revealed plans to seek a strategic alliance with Hong Kong to revolutionize the country’s digital sector.
In a seperate report, the chairman of the Financial Services Development Council (FSDC) in Hong Kong, Laurence Li Lu-Jen, confirmed that the crypto-friendly country seeks to establish a strong network with Middle East countries.
The executive mentioned that in the past, Hong Kong has strived to leverage its position to connect the world to the Mainland China. Li urged the Hong Kong government to up the game to create a network accessible to other places.
He acknowledged that the Middle East had joined other firms seeking to enter the Hong Kong market. Li stressed the need to improve the attractiveness of the Hong Kong market to attract more foreign investments and build a solid professional network in the Middle East and Asia.