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The Saudi Arabian Monetary Authority (SAMA) is stepping up its investigation into central bank digital currency (CBDC), though it has not disclosed plans to implement such a currency.
The bank announced that it is working on a phase of the project “focused on domestic wholesale CBDC use cases in conjunction with local banks and fintechs” in a bulletin issued on January 23.
Nevertheless, it was revealed that no firm decision has yet been made to introduce such a digital currency in the Middle East country.”
SAMA emphasizes that despite the fact that no decision has been taken on implementing CBDCs in the Kingdom, SAMA continues to concentrate on researching the advantages of introducing CBDCs as well as the possible harms associated with implementing them.”
SAMA is conducting research in various areas of state-issued digital currency, including the adoption of CBDC-based payment systems, the economic effects of the currency, and market readiness.
In addition, he plans to examine the relevant legal, policy and regulatory aspects.
This action was taken as part of Saudi Arabia’s Vision 2030 programme, which aims to reduce the kingdom’s dependence on oil, diversify its economy and expand public service industries such as health, education, infrastructure, recreation and tourism by 2030.
The Governor of SAMA, HE Fahad Almubarak, said local banks and payment businesses will play an important role in the CBDC project and its implementation.
In 2019, SAMA was able to perform a CBDC experiment known as “Project Aber” with flying colors.
It conducted this investigation together with the Central Bank of the United Arab Emirates to determine whether or not blockchain technology could play a role in international financial transactions.
In late 2020, the bank published a report detailing their research and came to the conclusion that dual-issued CBDCs are technically feasible to facilitate cross-border payments and present “significant improvements over centralized payment systems in terms of architectural resilience.”
No information is available about the technology that supports Saudi CBDCs; however, CBDC Tracker implies that it is built on top of the Hyperledger Fabric developed by the Linux Foundation.
The Atlantic Council, a think tank based in the United States, reports that to date there are 11 countries that have fully implemented CBDCs and 17 countries that are conducting pilots.
Most of those that have started operations are located in the Caribbean, except for one in Nigeria.
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