The Saudi Central Bank (SAMA) released a press release where it confirmed that the Central Bank is continuing to experiment on Central Bank Digital Currencies (CBDC). SAMA is currently working on a project that focuses on domestic or national wholesale CBDC use case in collaboration with local banks and FinTech’s.
Experts explained to LaraontheBlock that this is a CBDC for local wholesale bank settlements.
This project is part of SAMA’s ongoing research and experimentation on CBDC. SAMA is seeking to research and explore the economic impact, market readiness, and potential robust and fast applications of a CBDC based payment solution.
As per the news, SAMA seeks to review policy, legal and regulatory considerations before moving to the next phases of the CBDC journey to contribute to achieving the objectives of Saudi Vision 2030.
H.E. Fahad Almubarak, Governor of SAMA stated “Local banks and payment companies will always be a cornerstone of this project and its implementation, we have engaged both local banks and FinTech’s, as well as other market players and third party consulting and technology providers, to gain a better understanding of CBDC’s functionality and to test various design options.”
Noted as well, is that SAMA will continue to experiment on CBDC solution as an infrastructure enabler of innovation in financial services that has the potential to contribute to a more resilient payment ecosystem and accelerate digital transformation in the local financial sector.
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. This will contribute to informed decision-making within SAMA and to CBDC explorations within the central banking community.
Prior to this announcement, SAMA had hired Mohsen Al Zahrani as Head of Virtual assets and CBDC program. This seems to be the first fruit of efforts made.
In 2020 SAMA successfully conducted CBDC experiment “Project Aber” in 2019, an initiative in collaboration with the Central Bank of the UAE to examine whether distributed ledger technology could contribute to seamless cross-border payments.
During the 2023 World Economic Forum’s session on Financial Institutions innovating under pressure, the Saudi Arabian Minister of Finance Mohammed Al Jadaan states that while CBDCs have privacy issues they are fantastic tool in developing countries.