Saudi Arabia's riyal has been included as a settlement currency in the Arab Monetary Fund (AMF)'s regional cross-border payment system, becoming the third Arab currency to join the platform.
The kingdom's largest lender National Commercial Bank (NCB) has been assigned as a settlement bank for the Saudi currency, according to a joint statement from the AMF and Saudi Arabian Monetary Authority on Thursday.
The Saudi riyal's inclusion in Buna, as the AMF payments clearing and settlement system is known, follows the acceptance of the UAE dirham and Egyptian pound.
"We are on the right track to realise our strategic goal of adding key currencies to our platform in a consistent and sustainable pattern," Abdulrahman Al Hamidy, director general and chairman of the AMF board, said. "Adding the Saudi riyal to Buna’s list of settlement currencies, represents additional solid proof of the added value that our multi-currency platform can bring not only at regional level, but to the global payment industry."
In February, the AMF rolled out Buna, a multi-currency platform that aims to enable financial institutions, including commercial and central banks, to send and receive cross-border payments. The payments are across the Arab region and beyond, in Arab currencies and key international currencies.
The Saudi riyal is one of the most used currencies in cross-border payment transactions in the region, according to the statement.
"The inclusion of this major regional currency in Buna regional payment platform is key in realising Buna’s vision to empower Arab economies and promote regional integration, by encouraging the usage of Arab currencies in cross-border payments and investments," the fund and Saudi Arabia's banking regulator said in a statement.
The new Buna system will promote trade and investment between Arab countries. It will also help in the development of financial and banking services and products across the region, according to AMF.
Abu Dhabi-based AMF was founded in 1976 to support its member countries implement various economic and financial reforms and boost growth. Member countries include Jordan, the UAE, Bahrain, Saudi Arabia, Syria, Somalia, Iraq, Oman, Palestine, Kuwait, Lebanon, Libya and Egypt.
The fund aims to have a diversified and agile payment system, that offers modern payment solutions that comply with international standards in a safe, cost- effective, risk-controlled and transparent environment, Mr Al Hamidy said.