The Saudi Central Bank (SAMA) is stepping up its research into Central Bank Digital Currencies (CBDCs), but is not yet announcing any implementation.
In a Jan. 23 bulletin, the bank stated it was working on a phase of a project that “focuses on domestic wholesale CBDC use cases in collaboration with local banks and fintechs.”
However, it confirmed that no final decision had been made to launch such a digital currency in the Middle Eastern country.
“SAMA emphasizes that while no decision has yet been made on the introduction of CBDC in the Kingdom, it remains focused on exploring the benefits and potential risks of implementing CBDC.”
SAMA examines various aspects of a state-issued digital currency, including economic impact, market readiness and the applications of a CBDC-based payment solution. It also plans to review policy, legal and regulatory considerations.
The move is part of Saudi Vision 2030, an initiative to reduce the Kingdom’s dependence on oil, diversify the economy and develop public service sectors such as healthcare, education, infrastructure, recreation 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 in 2019 called “Project Aber”. It worked in partnership with the Central Bank of the United Arab Emirates (UAE) to explore whether blockchain technology could help cross-border payments.
The banks released a report on their findings in late 2020, which concluded that a dual-issued CBDC was technically feasible for cross-border payments and presented “significant improvement over centralized payment systems in terms of architectural resilience”.
Related: Research Reveals High Penetration And Adoption Of Crypto In Saudi Arabia
No details have been provided about the technology behind the Saudi CBDC, but CBDC Tracker suggests it is based on the Linux Foundation’s Hyperledger Fabric.
According to the American think tank Atlantic Council, there are currently 11 countries that have fully rolled out a CBDC and 17 pilots are underway. Most of those launched are in the Caribbean, with the exception of Nigeria.
