Central Bank of Saudi Arabia explores CBDCs for local wholesale bank settlements – Cryptopolitan

The Saudi Central Bank (SAMA) has recently announced its ongoing experiment of Central Bank Digital Currencies (CBDCs). Through this project, SAMA aims to better understand the potential uses of domestic or national wholesale CBDCs in collaboration with local banks and FinTechs. However, experts say the CBDCs will target wholesale bank settlements in Saudi Arabia.

As part of its dedication to discovering the capabilities and potential of CBDC, SAMA has embarked on a research mission focusing on the economic repercussions, market readiness, and rapid yet reliable applications that a CBDC-based payment solution may offer.

To ensure it meets the objectives of Saudi Vision 2030, SAMA thoroughly assesses policy, legal and regulatory considerations before advancing its Central Bank Digital Currency (CBDC) journey.

The success of this project is dependent on local banks and payment companies working together with FinTechs, industry players, third-party consultants, and technology providers to properly understand the functionality of Central Bank Digital Currency (CBDC) and evaluate various design options.

H.E. Fahad Almubarak, Governor of SAMA.

SAMA is committed to exploring a CBDC solution as the foundation for innovative financial services that could lead to a more secure payment system and spark digital transformation in the region’s finance industry.

Although SAMA has not yet decided on whether to introduce CBDC in the Kingdom, it is still actively studying both the advantages and possible risks of implementation. This will aid them in making an informed choice and furthering investigations on CBDC within central banking communities.

Following the appointment of Mohsen Al Zahrani as Head of the Virtual Assets and CBDC Program, SAMA has now reaped the rewards for its hard work. Last year, they conducted a ground-breaking experiment called “Project Aber” with the Central Bank to explore how distributed ledger technology could facilitate fast, cross-border payments.

At the 2023 World Economic Forum, wherein Financial Institutions discussed how to innovate under pressure, Saudi Arabian Minister of Finance Mohammed Al Jadaan illuminated that CBDCs may present privacy issues but are still invaluable tools for developing nations.