aimed that CBDCs may be a “wonderful tool” that developing nations could employ as a “social safety net.”
Local Banks and Fintechs Central to Saudi Arabia’s Digital Currency Project
As of right now, the Saudi Central Bank (SAMA) is concentrating on domestic wholesale CBDC [central bank digital currency] use cases in conjunction with local banks and fintechs as part of its continuous experiment with digital currencies. SAMA will also assess the market’s readiness during this testing phase, as well as the potential effects on the economy of a CBDC-based payment system.
Fahad Almubarak, the governor of SAMA, described the central bank’s CBDC strategy and asserted that local banks and payment businesses “would always be a cornerstone of this initiative and its implementation.” In order to better understand the roles of a CBDC as a whole, SAMA has already partnered with local banks, fintechs, and technology providers, according to a statement released by the central bank on January 23.
Fahad Almubarak, the governor of SAMA, described the central bank’s CBDC strategy and asserted that local banks and payment businesses “would always be a cornerstone of this initiative and its implementation.” In order to better understand the functions of a CBDC as well as the various design possibilities available, SAMA has already engaged local banks, fintechs, and technology providers, according to a statement released by the central bank on Jan. 23.
SAMA highlighted in the statement that “no decision has been taken regarding the introduction of CBDC in the Kingdom,” although promising to continue its research on CBDCs. The statement states that SAMA wants to make an informed choice, therefore it plans to keep “exploring the advantages and
SAMA highlighted in the statement that “no decision has been taken regarding the introduction of CBDC in the Kingdom,” although promising to continue its research on CBDCs. In order to make an informed choice, the statement claims that SAMA will keep “exploring the benefits and potential hazards of introducing CBDC.”
CBDCs Require Compromise on Privacy
The nation’s Minister of Finance, Mohammed Al-Jadaan, has praised CBDCs, praising them as an effective tool for developing nations despite the central bank’s apparent caution. According to comments he made at a session at the World Economic Forum, the Saudi minister also believes CBDCs are used to further social objectives.
“In my opinion, CBDCs would be a terrific tool to provide, for example, social safety net,” Al-Jadaan added. At least for developing countries.
The Saudi minister did admit, though, that while CBDCs can accomplish a lot, it will come at a price—a sacrifice of privacy.
The current CBDC experiment will also look into the idea of utilising the virtual currency as “an infrastructure enabler of innovation in financial services that has the potential to contribute to a more resilient payment ecosystem,” the Saudi central bank said in its statement.