The Central Bank of Saudi Arabia (SAMA) is ramping up research into central bank-issued digital currencies (CBDCs), however without announcing an implementation yet.
In a Jan. 23 bulletin, the bank said it was working on a phase of a project that “focuses on domestic wholesale CBDC use cases in partnership with local banks and fintechs.”
However, he confirmed that no final decision has been made regarding the launch of this digital currency in the Middle Eastern country.
“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.”
SAMA is studying several aspects of a state-issued digital currency, including the economic impact, market readiness and applications of an instrument-based payment solution. It also intends to examine political, legal and regulatory considerations.
The initiative is part of Saudi Vision 2030, a project aimed at reducing the kingdom’s dependence on oil, diversifying the economy and developing public service sectors such as health, education, infrastructure, recreation and tourism .
According to SAMA Governor HE Fahad Almubarak, local banks and payment companies will be heavily involved in the design and implementation of the CBDC.
In 2019, SAMA successfully conducted a CBDC experiment dubbed “Project Aber” – in collaboration with the Central Bank of the UAE – to understand whether blockchain technology could contribute to cross-border payments.
In late 2020 the banks released a report on their findings, concluding that a dual-issuance CBDC was technically feasible for cross-border payments and had “significant improvements over centralized payment systems in terms of architectural resilience”.
No details were provided about technology behind the Saudi CBDCbut CBDC Tracker suggests that it is based on the Linux Foundation’s Hyperledger Fabric.
According to the US think tank Atlantic Council, there are currently 11 countries that have fully implemented a CBDC and 17 are conducting pilot projects. Most of those that have been started are in the Caribbean and one in Nigeria.
