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

Central Bank of Saudi Arabia Explores CBDCs for local wholesale bank settlements

TL;DR Breakdown

  • The Saudi Central Bank (SAMA) announces its ongoing experiment of Central Bank Digital Currencies (CBDCs).
  • SAMA is committed to exploring a CBDC solution as the foundation for innovative financial services.

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 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 declared that it is committed to exploring CBDC solutions 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.

Before the announcement was made, SAMA hired Mohsen Al Zahrani as Head of the Virtual Assets and to oversee the CBDC program. In 2020, they conducted a ground-breaking experiment called “Project Aber” with the Central Bank of UAE 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.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

Damilola Lawrence

Damilola Lawrence

Damilola is a crypto enthusiast, content writer, and journalist. When he is not writing, he spends most of his time reading and keeping tabs on exciting projects in the blockchain space.

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