The Saudi central bank says that the ongoing CBDC experiment focuses on applications for domestic wholesale-fintech
The Saudi central bank says that the ongoing CBDC experiment focuses on applications for domestic wholesale-fintech
Saudi-Arabia's central bank experiment with digital currency (CBDC), which is carried out in cooperation with local banks and fintechs, is currently concentrating on domestic wholesale applications, said the central bank. Meanwhile, the Saudi finance minister said that CBDCs can be a "fantastic tool" that can be used by developing countries as a "social security network".
local banks and fintechs are the focus of the digital currency project of Saudi Arabia
The Saudi Central Bank (Sama) said its digital currency experiment was in progress and is currently concentrating "on domestic CBDC wholesale [Central Bank Digital Currency] Applications in cooperation with local banks and fintechs." In addition, Sama will examine the probable effects of a CBDC-based payment system on the economy and market maturity during this test phase.
Fahad Almubarak, the governor of Sama, outlined the CBDC approach of the central bank and claimed that local banks and payment companies "will always be a cornerstone of this project and its implementation". In order to support this claim, a statement by the Central Bank on January 23 states that Sama has already hired local banks, fintechs and technology providers to better understand the functions of a CBDC and the various available design options.
Although Sama swore to continue his research on CBDCs, it still emphasized in the explanation that "no decision was made regarding the introduction of CBDC in the kingdom". According to the statement, Sama wants to make a well -founded decision and therefore intends to "further examine the advantages and potential risks of implementing CBDC".
CBDCs require compromises in data protection
despite the apparently cautious approach of the central bank, the state's finance minister, Mohammed al-Jadaan, recently praised CBDCs, which he sees as a useful instrument for developing countries. According to his remarks during a global economic forum Minister also that CBDCs are used to promote social agendas.
"For me, CBDCs, at least for developing countries, would be a fantastic instrument, for example to provide a social security network," said Al-Jadaan.
The Saudi minister, however, admitted that CBDCs can achieve a lot, but will have their price - a compromise in relation to privacy.
Meanwhile, the Saudi central bank said in its explanation that the ongoing CBDC experiment would also examine the possibility of using the digital currency as "more infrastructure-more innovations in financial services that have the potential to contribute to a more resistance".
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