Saudi Central Bank still researching CBDC, but no decision on deployment

The Saudi Central Bank (SAMA) is ramping up its analysis into Central Bank Digital Currencies (CBDCs) but is but to announce a deployment.

In a Jan. 23 bulletin, the financial institution acknowledged it was working on a part of a challenge that “focuses on home wholesale CBDC use instances in collaboration with native banks and fintechs.”

However, it confirmed there had been no closing decision to launch such a digital forex within the Middle Eastern nation.

“SAMA stresses that though no decision has been made concerning the introduction of CBDC within the Kingdom, it continues to focus on exploring the advantages and potential dangers of implementing CBDC.”

SAMA is researching a number of points of a state-issued digital forex together with financial impression, market readiness, and the purposes of a CBDC-based cost answer. It additionally intends to evaluation coverage, authorized, and regulatory concerns.

The transfer is a part of Saudi Vision 2030, an initiative to scale back the Kingdom’s dependence on oil, diversify its financial system and develop public service sectors corresponding to well being, training, infrastructure, recreation, and tourism.

According to SAMA governor, H.E. Fahad Almubarak, native banks, and cost firms shall be closely concerned within the CBDC challenge and implementation.

Official picture of SAMA governor, H.E. Fahad Almubarak. Image: SAMA

SAMA efficiently performed a CBDC experiment referred to as “Project Aber” in 2019. It labored in collaboration with the Central Bank of the United Arab Emirates (UAE) to look at whether or not blockchain expertise might contribute to cross-border funds.

The banks launched a report on their findings in late 2020 concluding a dual-issued CBDC was technically viable for cross-border funds and offered “important enchancment over centralized cost methods by way of architectural resilience.”

Related: Survey reveals excessive penetration and adoption of crypto in Saudi Arabia

No particulars have been supplied on the expertise behind the Saudi CBDC, but CBDC Tracker suggests it’s based mostly on the Linux Foundation’s Hyperledger Fabric.

According to the United States assume tank Atlantic Council, there are at present 11 international locations which have absolutely deployed a CBDC, and 17 are working pilots. Most of people who have launched are within the Caribbean excluding Nigeria.