The Arab Monetary Fund (AMF) has published a guide to distributed ledger technologies (DLT) as it looks to encourage digital financial transformation.
‘Strategies for Adopting DLT/ Blockchain Technologies in Arab Countries’ aims to advise on policy development in the financial sector and related ‘pre-requisites’. The ambition more broadly is to boost the efficiency of financial and banking services, as well as supporting authorities’ financial inclusion efforts.
The guide describes ‘great opportunities’ for enhancing financial services by fostering the use of DLT – decentralised databases managed by multiple participants across multiple nodes – and elaborates on the various types of DLT. Blockchain is one such type.
The publication sets out how to formulate national strategies and overcome implementation challenges, as well as highlighting relevant initiatives from across the world.
‘Building a national strategy for the adoption of DLT by public and private sector enterprises is the first step in the successful, speedy, economic and tailored adoption of DLT technology in any country,’ the report notes. ‘However, given the nascency of DLT technically, legally and regulatorily, identifying the key elements of such a national strategy may be challenging.’
Examples from across the world
The 70-page guide, published on 17 August and prepared by the Arab Regional Fintech Working Group, is the latest in a run of fintech-focused publications by the AMF.
Global Government Fintech reported earlier this month on the second edition of the ‘Arab Region Fintech Guide’, which charts developments in areas ranging from regulatory sandboxes and open banking to cyber-security across 10 countries. This arrived three months after the AMF’s launch of the ‘FinxAr regional fintech development index’.
The DLT guide takes a different approach to these publications, focusing on providing examples of blockchain initiatives from beyond the Arab region, rather than analysing and comparing developments involving authorities within the nations of the AMF’s 22 members.
Estonia, widely seen as an e-government pioneer, is also mentioned: specifically, the country’s Information System Authority (RIA) and Keyless Signature Infrastructure (KSI) – a blockchain platform developed in the Baltic nation.
Further examples include India’s Ministry of Electronics & Information Technology’s ‘National Strategy on Blockchain’, issued in January 2021; the European Blockchain Partnership (EBP) – an initiative, launched in 2018, to develop a European Union strategy on blockchain and build a blockchain infrastructure for public services; and there are also sections on countries including Malta and Singapore.
With the Arab world, the report notes that the Abu Dhabi Digital Authority (ADDA) has been working on a government blockchain platform.
Implement and evaluate
‘To realise the full potential and benefits of DLT, governments must actively identify gaps in national public service delivery models that can be plugged in using the technology,’ the guide states.
Policy recommendations include formulating strategies to employ DLT and blockchain at a national level, building standards for technical solutions using DLT and blockchain, integration with pre-existing (legacy) systems, developing capacity and building awareness, as well partnering the private sector.
More specific recommendations highlight the need for integration with other services, for example smart contracts, digital signature, key custody and security solutions, in addition to integration with other technologies such as artificial intelligence, big data and the Internet-of-Things.
The guide, which also seeks to address what the AMF describes as ‘common myths and misconceptions’ about DLT/blockchain, includes an ‘evaluation matrix’ to track progress in adopting these techniques, including several indicators. These indicators address respective aspects of building an ecosystem for DLT and blockchain technologies, including indicators of organisational, technical, user engagement and industry indicators.
The guide was prepared and reviewed by senior representatives from organisations including Arab central banks, the Egypt Post (the governmental agency for Egypt’s postal service) and Islamic Development Bank Group (IsDB); as well as receiving input from Caroline Malcolm, head of the Organisation for Economic Cooperation and Development (OECD)’s Global Blockchain Policy Centre; Ahmed Faragallah and Raunak Mittal from the World Bank Group (WBG); and World Economic Forum (WEF) fellow Kathryn White.
‘Arab Monetary Fund highlights regional fintech progress’ – our news story (6 Aug 2021) on the AMF’s publication of the second edition of the ‘Arab Region Fintech Guide’
‘Arab Monetary Fund launches regional fintech development index’ – our news story (5 May 2021) on the ‘FinxAr’ index
‘Arab central banks: governments must ‘open up’ to open banking’ – our news story (1 Dec 2020) on an AMF ‘A Vision of Open Banking in the Arab World’ publication