History Sama Saudi Arabian Monetary Agency Essay

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SAMA

Historical evolution of functional responsibilities of SAMA

History of SAMA (Saudi Arabian Monetary Agency)

The Saudi Arabian Monetary Agency (SAMA) was established on October 4th, 1952 and is headquartered at Riyadh, Saudi Arabia. SAMA operates as the central bank of the Kingdom of Saudi Arabia (KSA). Before setting up the Saudi Arabian Monetary Agency, KSA utilized the service of Saudi Hollandi Bank as the central agency to keep the governments gold reserves. The idea of setting up SAMA as the central government operated agency was materialized by Abdallah Sulaiman, the then finance minister of KSA. The currency that SAMA regulates and prints is the Saudi Riyal, the official currency of KSA. The establishment of SAMA was decreed by King Abdul Aziz on 25/7/1371H, 20th of March, 1952 (SAMA, 2013).

Historical perspective

SAMA is currently the official agency charged with management of financial system. With the evolution and development of the financial system of Saudi Arabia, the role and responsibilities of SAMA have also transformed. Although, SAMA did not have the same structure and independence since its becoming, the institution has gained much independence from the government's interference in the monetary policies of KSA. The Saudi Arabian Monetary Agency was started with the help of the U.S. And Mr. George A. Blowers was the first governor of the agency.

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The agency started as having a confined role operating as a central bank under the confines of Islamic law. Technical and operational support from the start of this institution was provided by institutions such as International Monetary Fund (IMF) and other Western central banks. The first two governors of SAMA were George A. Blowers (1952-1954) and Ralph Standish (1954-1958). SAMA currently operates as the central bank but historically the agency has also managed the sovereign wealth of the kingdom (Ramady, 2010).

Significant influence of the U.S. And Saudi political and economic links has been casted on the operations and management of the agency since its early days. The role of Aramco of KSA and the U.S. embassy in Saudi Arabia has been significant in convincing the then King Abdul Aziz to develop an institution that was to be charged with monetary regulation and sustaining monetary stability. The initial setup of SAMA was totally outsourced and the accountants for the agency were hired from other Arab countries such as Lebanon. While sustaining itself in the initial era of its existence by charging government services, the agency has been developed as a quasi-autonomous central bank and regulatory body for monetary management….....

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