Bahrain in talks with Singapore on blockchain pilot

Singapore is getting more attention from the Arab world, with Arab money pouring in from all sides.

Now, it is the tiny Kingdom of Bahrain that has held talks with Singapore’s central bank as it devises plans for a pilot blockchain project in the Gulf State.

The Monetary Authority of Singapore (MAS), together with Singapore’s stock exchange and eight local and foreign banks, are in the midst of a project to use blockchain technology for interbank payments.

Now, Bahrain is looking to Singapore for inspiration as it develops its own blockchain trial.

Blockchain is an electronic transaction processing and public ledger system that allows parties to record information without the need for third-party verification.

It was originally developed to record transactions made via digital currency bitcoin.
Khalid Al Rumaihi, CEO of inward investment agency Bahrain Economic Development Board (EDB), said on Monday the country wants to become a pioneer in the burgeoning ‘fintech’ space, and national adoption of blockchain technology is a key enabler of this, the Arabian Business magazine reported.

The EDB said the ability for blockchain to be adopted at country level is a huge opportunity for Bahrain to move into the spotlight as a pioneer in this space.

The whole of the financial services sector is in the midst of “disruption by fintech”, said Rumaihi, who added Bahrain must adapt to rapidly changing technologies.

Under Singapore’s pilot system, partner banks will deposit cash as collateral with MAS in exchange for MAS-issued digital currency, the central bank’s managing director Ravi Menon announced last year.

The next phase of the project will involve transactions in foreign currency, “possibly with the support of another central bank”, Menon said.

Al Rumaihi gave no firm indication that the Central Bank of Bahrain was angling to become MAS’ proposed foreign partner.

However, he said Bahraini government officials were working to establish a ‘regulatory sandbox’ to allow fintech players to test new business models and products in compliance with Bahrain’s laws.