Saudi monetary authority rebranded along modern lines
King Salman recently approved a law to change the name of the Saudi Arabian Monetary Authority (SAMA) to the Saudi Central Bank.
It was more than a change of nomenclature, as the new law expanded the mandate of the central bank and altered its composition and reporting lines.
The rebranding of the Saudi financial regulator has been done in line with best international practices. The legislation extended the central bank's role to ensure monetary stability, instill confidence in the financial sector, and play a proactive role in the Kingdom’s economic transformation.
Central banks around the world are basically responsible for the formulation and implementation of a state’s monetary policies and issuing currency.
Before the passage of the law, SAMA was responsible for taking all these measures but due to the rapidly evolving world of business and finance and the advent of financial technology (fintech), new laws and mechanisms were required to keep pace with the rest of the world.
Innovation is key in the modern international business environment and the latest technology requires new mechanisms, greater transparency, and speedy execution of plans.
In other words, the changes did not aim to redefine the basic function or the mandatory status of the monetary authority. In fact, the role of the body has been expanded and it has been further empowered.
Central banks on a global scale play a major role in influencing the consumption behavior of members of society by imposing fees, offering incentives, and certain guarantees.
Under the legislation, the new Saudi Central Bank will be linked directly to the monarch, will enjoy full financial and managerial independence, and will be responsible for setting and managing monetary policy.
The relationship between the bank, the government, and other important international organizations and bodies has been outlined in the law, which also sets out a framework to govern the bank’s operations and decisions.
All these changes will ensure a remarkable development in the state’s foreign exchange management policies and mechanisms for dealing with gold and government bonds.
Most importantly, this transformation will play a key role in realizing the government’s goal of making the Kingdom an economic hub that is not reliant on oil income.
The new law focuses on maintaining the highest degree of transparency to ensure a foolproof monetary system that will be able to cope with the fast-evolving realities of the modern business world.
Under the new legislation, accountability mechanisms and strict supervision of all the related policies and regulations will be reassessed to remove any loopholes.
In addition to the move, Saudi Arabia has taken several other steps to modernize its financial and business sector. The rebranding of the monetary authority also requires induction of young talent to help the Kingdom achieve its economic goals.