The Saudi Central Bank (SAMA) is intensifying its investigation into Central Bank Digital Currencies (CBDCs), but has yet to announce a rollout.

In a January 23 newsletter, the bank stated that it was working on a phase of a project that “focuses on national wholesale CBDC use cases in collaboration with local banks and fintechs.”

However, he confirmed that there had been no final decision to launch such a digital currency in the Middle Eastern nation.

“SAMA emphasizes that although no decision has been made regarding the introduction of CBDC in the Kingdom, it continues to focus on exploring the potential benefits and risks of implementing CBDC.”

SAMA is investigating various aspects of a state-issued digital currency, including the economic impact, market readiness, and applications of a CBDC-based payment solution. It also intends to review political, legal and regulatory considerations.

The 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 HE Fahad Almubarak, local banks and payment companies will be heavily involved in the project and implementation of the CBDC.

Official image of the governor of SAMA, HE Fahad Almubarak. Image: SAMA

SAMA successfully ran a CBDC experiment called “Project Aber” in 2019. It worked in collaboration with the Central Bank of the United Arab Emirates (UAE) to examine whether blockchain technology could contribute to cross-border payments.

The banks published a report on their findings in late 2020 and concluded that a dual-issue CBDC was technically feasible for cross-border payments and presented a “significant improvement over centralized payment systems in terms of architectural resilience.”

Related: Survey Reveals High Cryptocurrency Penetration And Adoption In Saudi Arabia

No details about the technology behind Saudi CBDC were provided, but CBDC Tracker suggests that it is based on the Linux Foundation’s Hyperledger Fabric.

According to the US think tank Atlantic Council, there are currently 11 countries that have fully implemented a CBDC, and 17 are running pilots. Most of those that have been launched are in the Caribbean with the exception of Nigeria.

This post Saudi Central Bank continues to investigate CBDCs, but no decision on deployment

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