The XRP value surged late on Wednesday as the central bank of Saudi Arabia signed an agreement with Ripple to use its blockchain technology.
The deal, signed with the Saudi Arabian Monetary Authority (SAMA), will see Ripple develop software that will be used in the country’s banks to help settle payments using the blockchain software.
The pilot programme, the first of its kind to involve a central bank, will enable banks to use Ripple’s xCurrent software to instant settle payments going in and out of the country. Announced on Wednesday evening, the deal is expected to facilitate faster, cheaper and more transparent cross border transactions.
At the news, Ripple’s XRP token experienced a surge of interest from investors. Opening at $1.03 on Wednesday morning, XRP is now worth $1.13, meaning that its market capitalisation has increased by $4bn from $40bn to $44bn: a 10% rise.
Ripple’s global head of infrastructure, Dilip Rao said the deal with SAMA formed part of a growing trend as monetary institutions and authorities began to recognise and accept blockchain solutions in the financial sector.
“Central banks around the world are leaning into blockchain technology in recognition of how it can transform cross-border payments, resulting in lower barriers to trade and commerce for both corporates and consumers.
“SAMA is leading the charge as the first central bank to provide resources to domestic banks that want to enable instant payments using Ripple’s innovative blockchain solution.”
The Gulf-state has previously been reluctant to engage with new fintech developments, having previously warned its subjects not to invest in bitcoin as it was outside its regulatory control.
Other countries, like China, have already implemented blanket bans on cryptocurrencies; outlawing domestic exchanges last year and restricting web access to foreign platforms earlier this year.
Ripple also said that SAMA will provide training for banks interested in using the software. There are already over a 100 financial bodies which use Ripple’s software for global transactions. In January, Ripple was in “firm talks” with the monetary authority of Singapore.
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