The Financial Sector In Saudi Arabia Diversifies

Fahd Al-Mubarak, the governor of the Saudi Central Bank (SAMA), has declared that the Kingdom would allow additional digital banks to operate.

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Financial Regulation In Saudi Arabia

Economy Of SA

STC Pay was converted to STC Bank with a capital of SR 2.5 billion in June, while Saudi Digital Bank with a capital of SR 1.5 billion was authorized by the Council of Ministers in the same month.

It was pointed out by al-Mubarak that the Kingdom of Saudi Arabia has a cross-border digital money program with the United Arab Emirates. In addition, the Kingdom relishes the presence of a significant financial technology initiative.

The SAMA chief said that the region’s banks use a common currency for clearing. This strategy in the Gulf area is extremely similar to digital transactions and heavily relies on the US dollar. “We have the capacity to go to digital money at the regional level, which surpasses the capabilities of anybody else in the area,” he added.

Financial Regulation In Saudi Arabia

Banks, insurance businesses, payment service providers, and finance corporations are under the purview of the Saudi Arabian Central Bank (“SAMA”), whereas securities firms and Saudi capital markets fall under the jurisdiction of the Capital Market Authority (“CMA”).

In order to maintain a business climate that promotes both investor confidence and prudent risk management on the part of regulated firms while also encouraging economic development and innovation, the SAMA and the CMA are working nonstop to draft new laws. The Financial Sector Development Program, one of Vision the 2030s 12 executive programs, aims to diversify and improve the efficiency of the financial sector in order to allow financial institutions to promote private sector development.

There is just one organization in charge of overseeing the SA capital market: the Capital Market Authority (CMA). Through different awareness activities, it aims to enhance investors’ knowledge. Protecting local investors against unfair practices, frauds, and scams is a major responsibility, along with educating them on how to participate safely in capital markets. On top of everything else, keeping track of companies trading Saudi stocks and other financial instruments is a huge issue. It is also worth noting that as time goes trading Forex becomes quite popular among Saudi Arabia residents. For this reason, many people have questions like- is forex trading legal in Saudi Arabia or not and whether they are able to generate money through Forex trading. To make everything clear, it should be noted that trading in foreign currencies is permitted in the region. Several brokers operate branches in this country, where they are subject to the oversight of the Saudi government and Islamic law. For a limited time, you may use their services for free on a sample account. When you sign up for an account with a broker, be sure to tell your account manager that you want to create an Islamic trading account.

For the Islamic Forex market, interest is not allowed on a trading account, which makes it unique. Consequently, you have a Halal account.

Financial markets are becoming more diversified, as shown by recent events such as:

New innovations in the financial services business, such as E-wallet services and peer-to-peer (P2P) transfers, may be tested in SAMA’s regulatory sandbox, which was opened in February 2019.

An equivalent fintech lab has been built by the CMA, allowing capital market startups to put new technologies to the testing within predetermined boundaries and timelines.

Foreign investing in Saudi Arabia’s stock market is now legal according to the CMA’s new Rules for Qualified Foreign Investors (or “QFI Rules”).

CMA Instructions for Foreign Strategic Investors are based on QFI Rules and allow foreign ownership in Saudi-listed firms at a majority with CMA approval.

Economy Of SA

As one of the world’s twenty biggest economies, Saudi Arabia’s economy is the second-largest in the Middle East behind Turkey’s. With a confirmed oil resource second only to Russia’s, it’s no surprise that Russia is the world’s biggest supplier of petroleum.

Saudi Arabia is a member of the Organization of the Petroleum Exporting Countries (OPEC). Saudi Arabia’s government established its Saudi Vision 2030 in 2016 to diversify the economy and lessen the country’s dependence on oil. The country’s first budget surplus since 2014 was achieved in the first quarter of 2019. The growth in oil and non-oil income has resulted in a surplus of $10.40 billion in total.

GDP grew at its fastest rate in a decade in the third quarter, after a rebound in growth in the second quarter. Growth in the non-oil private sector slowed, while the government sector’s production grew at a faster pace in the first quarter of 2016. In October, point-of-sale transaction growth slowed somewhat from Q3 but GDP growth is expected to stay robust as the non-oil private sector PMI was above the previous quarter’s average, indicating solid demand conditions. As a result, oil output rose significantly in October as OPEC+ cutbacks continued to weaken. Household consumption will likely continue to rise at a rapid pace. With that stated, the prolonged health issue and unpredictable oil prices represent negative risks. GDP is expected to expand 5.2 percent in 2022, which is an increase of 0.2 percentage points over the previous estimate. Economic growth is expected to be 3.1% in 2023, according to the panel.