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Saudi Central Bank Advances CBDC Initiative with Fintech Firms & Banks

  • The Saudi Central Bank has announced a CBDC pilot program.

  • The agency emphasized that its plan to incorporate a CBDC into its economy is still under consideration.

  • The current phase of the research focuses on domestic wholesale CBDC use cases.

25-Jan-2023 By: Rohit Tripathi
Saudi Central Bank A

The Saudi Central Bank (SAMA) announced a phased effort with local 

Banks and fintech firms to experiment with central bank digital currency (CBDC).

The current phase of the project, according to the central bank, is focused on employing a CBDC as a domestic wholesale financial instrument.

CBDC Implementation Decision is Still Up in the Air

During this project stage, SAMA is exploring the economic impact, market viability, and potential use of CBDC-based payment solutions. As a result, a decision on establishing a centrally-backed currency is still waiting.

According to the central bank, "SAMA emphasizes that it is still concentrating on analyzing the advantages and dangers of introducing CBDC even if no decision has been made about its implementation in the Kingdom."

The agency also emphasized "informed decision-making" before moving on to the next stage of the project. As part of the Saudi Vision 2030 ambitions, SAMA intends to evaluate policy, legal, and regulatory issues.

A superior technological future is the cornerstone of the nation's 'Vision 2030' agenda. Within this context, SAMA might continue to analyze the CBDC solution as an infrastructure, perhaps enhancing the payment ecosystem.

The release also highlights that SAMA will also consult with others for the CBDC study. It consists of relevant international organizations, local government agencies, and members of the general public. 

H.E. Fahad Almubarak, Governor of SAMA, indicated that the institution has worked with local banks, fintechs, other market participants, and third-party consultancy and technology suppliers to better understand CBDC's operation. He stated that the project's foundation, comprised of local banks and payment suppliers, would evaluate multiple design options.

UAE's Crypto Focus Continue

SAMA conducted the CBDC experiment known as 'Project Aber' in 2019. The trial was completed by SAMA, the Central Bank of the United Arab Emirates (CBUAE), and other commercial banks.

Meanwhile, the UAE region's rules have pushed web3 enterprises. Thani Al-Zeyoudi, the UAE's minister of state for foreign trade, recently spoke with Bloomberg about the UAE's ambitions

The region also established the Dubai Metaverse Strategy last year. The Crown Prince of Dubai intended to introduce Dubai as one of the top ten metaverse economies with this. In order to attract enterprises, the region competes with Hong Kong and Singapore.

However, on February 27 and 28, Dubai will hold the ninth Global Forum, which will focus on blockchain, cryptocurrencies, and crypto mining.

Also read: Gary Gensler Strives Control Over Crypto With New Proposed Rule

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