The Saudi central bank emphasized that no decision has been made to start a CBDC in the Kingdom, but that it will continue to investigate use cases.
The Saudi Central Bank (SAMA) is expanding its research into Central Bank Digital Currencies (CBDCs), but no deployment date has been announced.
The bank indicated in a January 23 bulletin that it was working on a phase of a project that “focuses on domestic wholesale CBDC use cases in conjunction with local banks and fintechs.”
However, it noted that no final decision had been made to create such a digital currency in the Middle Eastern country.
“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.”
SAMA is investigating the economic impact, market preparedness, and uses of a CBDC-based payment solution of a state-issued digital currency. It also intends to examine policy, legal, and regulatory issues.
The move is part of Saudi Vision 2030, a plan to diversify the Kingdom’s economy and promote public service areas such as health, education, infrastructure, recreation, and tourism.
Local banks and payment businesses, according to SAMA governor H.E. Fahad Almubarak, will be significantly involved in the CBDC project and execution.
In 2019, SAMA successfully completed “Project Aber,” a CBDC experiment. It collaborated with the Central Bank of the United Arab Emirates (UAE) to investigate if blockchain technology could help with cross-border payments.
In late 2020, the banks submitted a report summarising their findings, saying that a dual-issued CBDC was technically viable for cross-border payments and offered “substantial improvement over centralized payment systems in terms of architectural robustness.”
The Saudi CBDC’s technology was not disclosed, however, CBDC Tracker believes it is based on the Linux Foundation’s Hyperledger Fabric.
According to the United States research tank Atlantic Council, 11 countries have completely deployed a CBDC, and 17 are conducting pilots. With the exception of Nigeria, the majority of those that have debuted are in the Caribbean.