The Saudi Central Bank (SAMA) is conducting research into Central Bank Digital Currencies (CBDCs) but has not yet announced any plans to deploy such a currency.
In a recent statement, the bank stated that it is currently in the midst of a project that focuses on domestic wholesale CBDC use cases in collaboration with local banks and fintechs.
However, the bank confirmed that no final decision has been made to launch a CBDC in the country.
SAMA is researching various aspects of a state-issued digital currency, including its economic impact, market readiness, and the potential applications of a CBDC-based payment solution. The bank also plans to review policy, legal, and regulatory considerations.
This 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 SAMA Governor, H.E. Fahad Almubarak, local banks and payment companies will play a key role in the CBDC project and implementation.
In 2019, SAMA successfully conducted a CBDC experiment called “Project Aber” in collaboration with the Central Bank of the United Arab Emirates (UAE) to investigate whether blockchain technology could be used to facilitate cross-border payments.
The banks released a report on their findings in late 2020, concluding that a dual-issued CBDC was technically viable for cross-border payments and presented “significant improvement over centralized payment systems in terms of architectural resilience.”
No specific details have been provided on the technology behind the Saudi CBDC, but CBDC Tracker suggests it is based on the Linux Foundation’s Hyperledger Fabric.
As SAMA continues to research CBDCs, it remains to be seen whether the bank will ultimately decide to deploy such a currency in the country.
