Saudi Central Bank Says Ongoing CBDC Experiment Focused on Domestic Wholesale Use Cases – The Saudi Central Bank (SAMA) is currently conducting experiments with digital currency, specifically focusing on using it for wholesale transactions within the country in partnership with local banks and fintech companies. They are also assessing the potential effects of using a CBDC-based payment system on the economy and determining the market’s readiness for it.
Outlining the central bank’s CBDC approach, Fahad Almubarak, the governor of SAMA, claimed that local banks and payment companies “will always be a cornerstone of this project and its implementation.” To support this claim, a statement issued by the central bank on Jan. 23 states that SAMA has already engaged local banks, fintechs, and technology providers as it seeks to better understand the functions of a CBDC as well as the different design options available.
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Although SAMA has vowed to continue its research on CBDCs, it nonetheless emphasized in the statement that “no decision has been made regarding the introduction of CBDC in the Kingdom.” According to the statement, SAMA wants to make an informed decision thus it intends to continue “exploring the benefits and potential risks of implementing CBDC.”
Despite appearing cautious, the country’s Minister of Finance, Mohammed Al-Jadaan, has praised the use of CBDCs as a useful tool for developing countries and to further social agendas, as he stated in a World Economic Forum session. “For me, I think CBDCs, at least for developing nations, would be a fantastic tool to provide for example social safety net,” Al-Jadaan said.
However, the Saudi minister did acknowledge that while CBDCs can achieve much, it will be at a cost — a compromise on privacy. Meanwhile, in its statement, the Saudi central bank said the ongoing CBDC experiment will also examine the possibility of using the digital currency as “an infrastructure enabler of innovation in financial services that has the potential to contribute to a more resilient payment ecosystem.”
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