The Saudi Central Bank (SAMA) is increasing its research into Central Bank Digital Currencies (CBDCs) but has not yet announced its deployment.
In its January 23 newsletter, the bank stated that it is working on a project phase that “focuses on domestic wholesale CBDC use cases in collaboration with local banks and fintechs.”
However, it is confirmed that there is no final decision to launch the digital currency in the Middle Eastern country.
“SAMA confirms 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 examines several aspects of state-issued digital currencies including economic impact, market readiness, and the application of CBDC-based payment solutions. It also aims to examine policy, legal, and regulatory considerations.
The move is part of Saudi Vision 2030, an initiative to reduce the Kingdom’s dependence on oil, diversify its economy and develop public service sectors such as health, education, infrastructure, recreation, and tourism.
According to the governor of SAMA, HE Fahad Almubarak, local banks and payment companies will be heavily involved in the CBDC project and implementation.
SAMA successfully conducted a CBDC experiment called “Project Aber” in 2019. It cooperated with the Central Bank of the United Arab Emirates (UAE) to examine whether blockchain technology can contribute to cross-border payments.
The banks published a report on their findings at the end of 2020 concluding that the CBDC issued twice is technically viable for cross-border payments and presents “significant improvements to the centralized payment system in terms of architectural resilience.”
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No details were provided about the technology behind the Saudi CBDC, but CBDC Tracker suggests it is based on the Linux Foundation’s Hyperledger Fabric.
According to the American think tank Atlantic Council, there are currently 11 countries that have fully deployed CBDC, and 17 are in the pilot phase. Most of those that have been launched are in the Caribbean with the exception of Nigeria.