While the Saudi Central Bank (SAMA) is stepping up its investigation into central bank digital currencies (CBDCs), it has yet to make an announcement regarding a rollout. SAMA emphasizes that even while no choice has been made regarding the legalization of CBDC in Saudi Arabia, research into the advantages and dangers of doing so is still a top priority.
SAMA stresses that although 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.
A phase of a project that focuses on domestic wholesale CBDC use cases is being worked on by the bank in partnership with regional banks and fintech firms, according to a statement published on January 23.
It did, however, disclose that there had not been a final decision made to introduce such a digital currency in the Middle Eastern country.
The applications of a CBDC-based payment solution and the economic impact and market viability of a state-issued digital currency are all subjects of research by SAMA. In addition, the SAMA will review legal and regulatory aspects.
The initiative is an element of Saudi Vision 2030, a plan to lower the Kingdom’s reliance on oil, diversify its economy, and expand public service areas like health, education, infrastructure, recreation, and tourism.
Local banks and payment businesses will be heavily involved in the CBDC project and implementation, as per SAMA governor H.E. Fahad Almubarak.
In 2019, SAMA carried out the CBDC experiment known as “Project Aber” with success. The Central Bank of the United Arab Emirates (UAE) collaborated to investigate the potential benefits of blockchain technology for international payments.
A dual-issued CBDC is technically feasible for cross-border payments and offers “substantial improvement over centralized payment systems in terms of architectural resilience,” according to a study on the banks’ results published in late 2020.
Globally, the idea of CBDCs has gained some traction and is starting to gain the interest of several nations. . While countries like Australia, Thailand, and Japan have made enough noise about their CBDCs, vigilant administrations of South Korea, Thailand, Sweden , and India have also pushed for it.
For example, the Bank of Korea has created and tested a method that allows cross-border payments, as Todayq News reported earlier this month. By connecting multiple central bank digital currencies (CBDC) globally, the bank hopes to streamline the process. Financial institutions worldwide are also expecting CBDCs to streamline international trade.