Financial Institutions - Questions and Discussion
Alrayes
Fin402QuestionandDiscussion.docx
Question and Discussion
Q1. What is the mission of a central bank? [1.5 Marks]
Q2. What are the policy tools that central banks have? [1.5 Marks]
Q3. Explain how the Saudi Central Bank's response to Covid-19 helped the economy? [2 Marks].
Discussion: - (2 Marks)
Topic: “How is project Aber related to Saudi Central Bank? What is the added value of project Aber? What is the expected effect of the project on financial innovation?”. Discuss
You are required to reply to at least two peer responses to this week’s discussion question. Your replies need to be substantial and constructive in nature so replies such as “I agree with you”, “great post”, “great point” ……. Etc. IT WILL NOT BE ACCEPTED. Also, You can add to your discussion from online resources, BUT YOU HAVE TO CITE YOUR WORK.
Peer Responses: -
1) Ahmed:
The Aber project was a drive instituted by Saudi Arabia's central banks and the UAE to examine the feasibility of a sole double-issued electronic money as a tool of settlement of domestic and cross-border between two states.The project's added value is that it can experiment, explore, and obtain a deep knowledge of the shared ledger and analyze its settlement terms. Also, to understand and scrutinize the double issuance of the digital money, execute benchmark data and explore an alternative distributed ledger found on usage frequency on payment systems that can get control of inefficiencies in current cross-bank transaction approaches. The anticipated effect of the project on the financial innovation is that digitized equities and bonds will be settled through the safest form of payment-on-chain, settlement risks will be reduced.The report indicates that detailed IT, business, and monetary policy recommendations are exceeded. Lastly, the financial institutions should take active participation roles, managing local links on the system and involving the fullest from a business and technical outlook in the project's plan.
2) Khaled:
A new relationship with the Central Bank and the definition of the project is an innovative initiative launched by the Central Bank of Saudi Arabia and the Central Bank of the United Arab Emirates. It aims to prove the feasibility of issuing a common digital currency by using distributed ledger technologies to test the possibility of benefiting from it in developing cross-border payment systems between the two countries. Also, the Aber project is an opportunity to study the infrastructure based on blockchain technology and distributed records, and to study the technical dimensions of the central bank’s digital currency and how it is issued and traded, in addition to settlements between banks.
What is the added value of a project?
Added issuance of a common central bank digital currency (Wholesale Central Bank Digital Currency), and its use through distributed ledger technologies; This is to settle cross-border payments between a number of banks participating in the experiment from both parties. And also with the aim of implementing banking transactions from the technical and practical side, and the impact of this currency on a number of aspects, and also that the issued digital currency was limited to the use of the two central banks and banks participating in the project only.
What is the expected impact of the project on the financial investment?
It has the effect of many of them by providing actual funds from its reserves with the Central Bank; The aim is to fund the digital currency accounts used by it.
The use of real money has helped central banks and commercial banks study the mechanisms and ways in which digital currency will be managed in their records.
Determine the basic banking services systems that will be affected if such a system is applied in the actual operational environment and expand its scope. This has resulted in a series of lessons learned and valuable feedback that commercial banks would not have had if actual money had not been used in the experiment.
Using several methods in terms of technology and development, such as Blockchain technology and distributed ledger.
Also, the social return on investment (SROI) is a means of measuring the added financial value based on certain principles (for example the environmental and social value that is not reflected in the current traditional financial accounts) related to the invested resources. It can be used by any entity to assess the impact on stakeholders and identify ways to improve performance and enhance the performance of investments.
Note: Please separate the questions references and answers from the discussion .
Q
uestion and Discussion
Q1.
What is the mission of a central bank
?
[
1.5
Mark
s
]
Q
2
.
What
are the policy tools that central banks have?
[1
.5
Mark
s
]
Q3
.
Explain how the Saudi Central Bank's response to Covid
-
19 helped the economy?
[
2
Mark
s
]
.
Discussion:
-
(
2
Marks
)
Topic: “How is project Aber related to Saudi Central Bank? What is the added value of project
Aber? What is the expected effect of the project on financial innovation?”. Discuss
You are required to reply to at least two peer responses to this week’s discussion question. Your
replies need to be substantial and constructive in nature so replies such as “I agree with you”,
“great post”, “great point” ……. Etc. IT WILL NOT BE ACCEPTED.
Also, You can add to
your discussion from online resources, BUT YOU HAVE TO CITE YOUR WORK.
Peer
Responses:
-
1)
Ahmed:
The Aber project was a drive instituted by Saudi Arabia's central banks and the UAE to examine
the
feasibility of a sole double
-
issued electronic money as a tool of settlement of domestic and
cross
-
border between two states
.
The project's added value is that it can experiment, explore, and
obtain a deep knowledge of the shared ledger and analyze its se
ttlement terms. Also, to
understand and scrutinize the double issuance of the digital money, execute benchmark data and
explore an alternative distributed ledger found on usage frequency on payment systems that can
get control of inefficiencies in current
cross
-
bank transaction approaches. The anticipated effect
of the project on the financial innovation is that digitized equities and bonds will be settled
through the safest form of payment
-
on
-
chain, settlement risks will be reduced
.
The report
indicates th
at detailed IT, business, and monetary policy recommendations are exceeded. Lastly,
the financial institutions should take active participation roles, managing local links on the
system and involving the fullest from a business and technical outlook in the
project's plan.
2)
K
ha
l
e
d:
A new relationship with the Central Bank and the definition of the project is an innovative
initiat
ive launched by the Central Bank of Saudi Arabia and the Central Bank of the United
Arab Emirates. It aims to prove the feasibility of issuing a common digital currency by using
distributed ledger technologies to test the possibility of benefiting from it
in developing
cross
-
border payment systems between the two countries. Also, the Aber project is an
opportunity to study the infrastructure based on blockchain technology and distributed
records, and to study the technical dimensions of the central bank’s d
igital currency and how
it is issued and traded, in addition to settlements between banks.
Question and Discussion
Q1. What is the mission of a central bank? [1.5 Marks]
Q2. What are the policy tools that central banks have? [1.5 Marks]
Q3. Explain how the Saudi Central Bank's response to Covid-19 helped the economy? [2 Marks].
Discussion: - (2 Marks)
Topic: “How is project Aber related to Saudi Central Bank? What is the added value of project
Aber? What is the expected effect of the project on financial innovation?”. Discuss
You are required to reply to at least two peer responses to this week’s discussion question. Your
replies need to be substantial and constructive in nature so replies such as “I agree with you”,
“great post”, “great point” ……. Etc. IT WILL NOT BE ACCEPTED. Also, You can add to
your discussion from online resources, BUT YOU HAVE TO CITE YOUR WORK.
Peer Responses: -
1) Ahmed:
The Aber project was a drive instituted by Saudi Arabia's central banks and the UAE to examine
the feasibility of a sole double-issued electronic money as a tool of settlement of domestic and
cross-border between two states.The project's added value is that it can experiment, explore, and
obtain a deep knowledge of the shared ledger and analyze its settlement terms. Also, to
understand and scrutinize the double issuance of the digital money, execute benchmark data and
explore an alternative distributed ledger found on usage frequency on payment systems that can
get control of inefficiencies in current cross-bank transaction approaches. The anticipated effect
of the project on the financial innovation is that digitized equities and bonds will be settled
through the safest form of payment-on-chain, settlement risks will be reduced.The report
indicates that detailed IT, business, and monetary policy recommendations are exceeded. Lastly,
the financial institutions should take active participation roles, managing local links on the
system and involving the fullest from a business and technical outlook in the project's plan.
2) Khaled:
A new relationship with the Central Bank and the definition of the project is an innovative
initiative launched by the Central Bank of Saudi Arabia and the Central Bank of the United
Arab Emirates. It aims to prove the feasibility of issuing a common digital currency by using
distributed ledger technologies to test the possibility of benefiting from it in developing
cross-border payment systems between the two countries. Also, the Aber project is an
opportunity to study the infrastructure based on blockchain technology and distributed
records, and to study the technical dimensions of the central bank’s digital currency and how
it is issued and traded, in addition to settlements between banks.
