The Central Bank of Saudi Arabia (SAMA) is expanding its study of central bank digital currencies (CBDC) but has yet to announce the rollout.
In a January 23 newsletter, the bank said it was working on a phase of the project that “focuses on in-house use cases for wholesale CBDCs 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 country.
“SAMA emphasizes that while no decision has been made to implement CBDC in the Kingdom, it continues to focus on exploring the benefits and potential risks of implementing CBDC.”
SAMA is investigating several aspects of the government’s digital currency, including economic impact, market readiness, and the adoption of a CBDC-based payment solution. It also intends to consider political, legal and regulatory aspects.
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 actively participate in the design and implementation of the CBDC.
SAMA successfully ran a CBDC experiment called “Project Aber” in 2019. In collaboration with the Central Bank of the United Arab Emirates (UAE), it has been working to explore whether blockchain technology can facilitate cross-border payments.
At the end of 2020, the banks published a report on their findings stating that dual-issuance CBDC is technically viable for cross-border payments and represents a “significant improvement over centralized payment systems in terms of architectural resilience”.
Related: Survey Shows High Cryptocurrency Penetration And Adoption In Saudi Arabia
No details were provided on the Saudi CBDC technology, but CBDC Tracker suggests it is based on the Linux Foundation’s Hyperledger Fabric.
According to the United States, thanks to the Atlantic Council, 11 countries have now fully rolled out CBDCs, and 17 have launched pilot projects. Most of those launched are in the Caribbean, with the exception of Nigeria.