The government is actively promoting Qatar as a regional centre for financial technology (fintech) as new, cost-effective technologies are becoming increasingly prominent worldwide, the QCB said in its 10th Financial Stability Review.
The Qatar Central Bank, the FSR said, is striving to protect and promote the financial sector in Qatar, making it not only capable of facing the challenges but turning them into potential growth opportunities. “Qatar has recognised financial technology (fintech) as a primary tool for achieving long-term development goals for the financial sector,” according to HE the QCB Governor, Sheikh Abdulla bin Saoud al-Thani.
Under Qatar’s Second Strategic Plan for Financial Sector Regulation 2017-22, fintech has been recognised as a primary tool for achieving long-term development goals for the financial sector.
The blockchain, also called distributed ledger technology (DLT), is an open, distributed database that can record transactions among parties efficiently and in a verifiable and permanent way.
The application of the blockchain is being explored, especially in payment, clearing and settlement activities because of potential efficiency gains arising from the technology, as in the case of cross-border payments.
The blockchain-based digital payment system will bring low cost, high efficiency solution to serve the future digital economy to ensure people can exchange value in a secure, instant way without the need of trusted custodial clearinghouses or escrow services.
The blockchain technology has received a lot of attention over the last few years, noted the QCB.
With global banking currently a $134tn industry, blockchain technology and DLT could disintermediate key services that banks provide, viz., by establishing a decentralised ledger for payments (e.g. bitcoin), blockchain technology could facilitate faster payments at lower fees than banks, distributed ledgers can reduce operational costs and bring us closer to real-time transactions between financial institutions for the benefit of Clearance and Settlement Systems.
The Monetary Authority of Singapore (MAS) and the country’s stock exchange, Singapore Exchange (SGX), have developed a settlement system for tokenised assets that can work across different blockchain.
IBM's blockchain-based real-time global payments network has begun rollout, with several banks also committing to issue their own stable coins on the platform, the QCB said.
The Committee on Payments and Market Infrastructures at the Bank for International Settlements (BIS) stated in their paper "Distributed Ledger Technology in Payment, Clearing and Settlement", that, developments to date suggest that DLT bears promise but that there is still a long way to go before that promise may be fully realised.
Much work is needed to ensure that the legal underpinnings of DLT arrangements are sound, governance structures are robust, technology solutions meet industry needs, and that appropriate data controls are in place and satisfy regulatory requirements.
It also seems clear that changes and related efficiency gains are more likely to be incremental than revolutionary.
“Blockchain has reached the shores of Qatar, as one bank has already completed a blockchain-based pilot program to improve international money transfers. They also have a second phase of the project already planned, focusing on trade finance applications and extending the blockchain technology beyond payments to include legal and trade documents,” Qatar Central Bank said.