CBDC pilot tests reach next stage in Saudi Arabia
The Saudi Central Bank (SAMA) announced that it is experimenting with central bank digital currency (CBDC) through a phased project with local banks and fintech companies.
The central bank noted that the project’s current phase is focused on using a CBDC as a domestic wholesale financial instrument.
Decision on CBDC implementation is still up in the air
SAMA is investigating the economic impact, market viability and potential application of CBDC-based payment solutions during this project phase. Therefore, a decision to introduce the centrally supported currency is pending.
The central bank stated, “SAMA emphasizes that while no decision has been made regarding the introduction of CBDC in the Kingdom, it continues to focus on exploring the benefits and potential risks of implementing CBDC.”
The agency also emphasized “informed decision-making” before moving on to the next phase of the experiment. SAMA aims to analyze political, legal and regulatory matters as part of the Saudi Vision 2030 objectives.
The cornerstone of the country’s ‘Vision 2030’ plan is a future with superior technology. Within this, SAMA can also continue to evaluate the CBDC solution as an infrastructure – furthering the potential to grow the payments ecosystem.
The release also highlights that SAMA will consult others for the CBDC study. It includes relevant international organisations, local government organizations and the general public. The Governor of SAMA, HE Fahad Almubarak, stated that the institution has been engaging with local banks, fintechs, other market participants and third-party consultants and technology providers to better understand the CBDC’s functionality. He noted that it would test different design options with the project’s foundation consisting of local banks and payment providers.
UAE’s focus on crypto remains
In 2019, SAMA completed the CBDC experiment called ‘Project Aber.’ SAMA concluded the experiment together with the Central Bank of the United Arab Emirates (CBUAE) and other commercial banks.
Meanwhile, the UAE region has been pushing web3 companies through its policies. In a recent interview with Bloomberg, Thani Al-Zeyoudi, the UAE’s Minister of Foreign Trade, spoke about the UAE’s plans. He said: “Crypto will play an important role for UAE trade going forward,”
Last year, the region also launched the Dubai Metaverse Strategy. With this, the Crown Prince of Dubai planned to introduce Dubai as one of the top 10 metaverse economies. The region is also locking horns with Hong Kong and Singapore to attract businesses.
“The most important thing is that we ensure global governance when it comes to cryptocurrencies and crypto companies,” Al-Zeyoudi told the media. “We started to attract some of the companies to the country with the aim that together we will build the right governance and legal system, which is necessary.”
That being said, on February 27th and 28th, Dubai will host the tenth Global Forum which will focus on the topics of blockchain, cryptocurrencies and cryptomining.
Disclaimer
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