Saudi Central Bank still investigating CBDC, but no decision on deployment

Saudi Central Bank (SAMA), Central Bank Digital Currencies (CBDCs) but has yet to announce a distribution.

on January 23 bulletinThe bank said it is working on a phase of a project that “focuses on local wholesale CBDC use cases in collaboration with local banks and fintechs.”

However, he confirmed that there is no final decision to launch such a digital currency in the Middle Eastern country.

“SAMA emphasizes that although no decision has been made regarding the introduction of CBDC in the Kingdom, it remains focused on exploring the benefits and potential risks of implementing CBDC.”

SAMA explores various aspects of a government-issued digital currency, including economic impact, market readiness, and applications of a CBDC-based payment solution. It also aims to review policy, legal and regulatory issues.

The move is part of the Saudi Vision 2030, an initiative to reduce the Kingdom’s reliance on oil, diversify its economy and develop public service sectors such as healthcare, education, infrastructure, leisure and tourism.

According to SAMA governor HE Fahad Almubarak, local banks and payment companies will be heavily involved in the CBDC project and implementation.

Official picture of HE Fahad Almubarak, governor of SAMA. Image: SAMA

SAMA successfully conducted a CBDC experiment called “Project Aber” in 2019. He worked in collaboration with the Central Bank of the United Arab Emirates (UAE) to examine whether blockchain technology could contribute to cross-border payments.

Banks They published a report on their findings It was concluded that a CBDC issued bilaterally in late 2020 is technically viable for cross-border payments and provides “significant improvement over centralized payment systems in terms of architectural durability.”

Related: Survey reveals high crypto penetration and adoption in Saudi Arabia

No details were given about the technology behind the Saudi CBDC, but CBDC Tracking It claims to be based on the Linux Foundation’s Hyperledger Fabric.

According to the US think tank Atlantic CouncilCurrently, there are 11 countries that are fully implementing a CBDC, and 17 are piloting it. Most of the starters are in the Caribbean outside of Nigeria.