The Saudi Arabian Central Bank (SAMA) is stepping up research into central bank digital currencies (CBDCs), but has yet to announce a rollout.
In a Jan. 23 newsletter, the bank said it was working on a phase of a project that “focuses on wholesale national CBDC use cases in collaboration with local banks and fintechs.”
However, he confirmed that there was no final decision to launch such a digital currency in the Middle Eastern nation.
“SAMA stresses that while no decision has been made regarding the introduction of CBDC in the Kingdom, it continues to focus on exploring the potential benefits and risks of implementing CBDC. “
SAMA is investigating several aspects of a state-issued digital currency, including economic impact, market readiness, and applications for a CBDC-based payment solution. It also intends to examine policy, legal and regulatory considerations.
The move is part of Saudi Vision 2030, an initiative to reduce the Kingdom’s dependence on oil, diversify its economy and develop public service sectors such as health, 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.
SAMA successfully conducted a CBDC experiment called “Project Aber” in 2019. It worked in collaboration with the Central Bank of the United Arab Emirates (UAE) to examine whether blockchain technology could help cross-border payments.
The banks released a report on their findings in late 2020 concluding that a dual-issue CBDC was technically viable for cross-border payments and featured “significant improvement over centralized payment systems in terms of architectural resilience.”
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No details were provided on the technology behind the Saudi CBDC, but CBDC Tracker suggests that it is based on the Linux Foundation’s Hyperledger Fabric.
According to the US think thank you Atlantic Council, there are currently 11 countries that have fully deployed a CBDC, and 17 are running pilots. Most of those launched are in the Caribbean, with the exception of Nigeria.