US-based technology company Ripple has announced a partnership with Saudi Arabia’s largest bank, the National Commercial Bank of Saudi Arabia (NCB).
Ripple’s network of banks and payment providers known as Ripplenet plays the predominant role in the terms of the partnership, with NCB agreeing to use the service for connecting with other financial institutions. Ripplenet claims to provide a more economical, standardized and legally streamlined method for international money transfers.
The partnership will open up NCB to companies first in Singapore, then Asia and North America – all regions that the Saudi bank previously did not have access to. The commercial bank was first established in 1953 and claims 400 branches across Saudi Arabia, with over 5.4 million customers globally.
XRP, the Ripple network’s local token, can be used by banks to source liquidity on demand in real time, with no pre-funding of nostro accounts (accounts that a bank holds in a foreign currency in another bank) required. Payment providers can also benefit from using XRP in terms of saving costs on foreign exchange rates and enjoying a faster payment settlement.
According to Ripple, XRP payments can be settled in four seconds, as opposed to the several minutes Ethereum transfers take and Bitcoin payments that sometimes require up to an hour to be approved.
Islam and crypto
Saudi Arabia’s legal system is founded on the Islamic Sharia law. As Bitcoin News reported earlier this month, the first fully Sharia-compliant cryptocurrency exchange has now launched in the UAE.
While Islam prohibits fractional reserve lending which underpins most fiat currencies, cryptocurrency is based on the logistics of scarcity. Academic discussions on the subject have suggested that cryptocurrencies may be, in fact, more Sharia-compliant than fiat.
In April, Islamic scholar Mufti Muhammad Abu Bakar published a paper detailing how the majority of the time Bitcoin is Halal (permissible), with the caveat that illicit use of the cryptocurrency or use of it in countries where it is prohibited by local laws are not Sharia-compliant.
As Muslims account for around 23% of the world’s population, they may yet become a powerful force in the market.
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