SAMA furthers CBDC Research

The Saudi Central Bank (SAMA) has announced that it is increasing its research into central bank digital currencies (CBDCs), but has not yet confirmed if it will launch a digital currency in the country. SAMA is currently investigating various aspects of a state-issued digital currency, including its potential economic impact, market readiness, and the applications of a CBDC-based payment solution.

The bank also plans to review the policy, legal, and regulatory considerations involved in implementing a CBDC. This research is part of Saudi Vision 2030, a government initiative to reduce the country’s dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation, and tourism.

SAMA governor H.E. Fahad Almubarak stated that local banks and payment companies will play a significant role in the CBDC project and its implementation. SAMA previously conducted a successful CBDC experiment called “Project Aber” in 2019, which it conducted in collaboration with the Central Bank of the United Arab Emirates to explore the potential of blockchain technology for 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.” The technology behind the potential Saudi CBDC has not been announced, but it is speculated to be based on the Linux Foundation’s Hyperledger Fabric.