The Saudi Arabian Monetary Authority (SAMA) is stepping up its investigation into central bank digital currencies (CBDCs), although it has not yet disclosed any plans to implement such a currency.
The bank announced that it was working on a phase of a project that "focuses on domestic wholesale CBDC use cases in conjunction with local banks and fintechs" in a bulletin that was issued on January 23.
Nevertheless, it was revealed that there had been no definitive decision made to introduce such a digital currency in the Middle Eastern country."
SAMA emphasises that despite the fact that no decision has been taken on the implementation of CBDC in the Kingdom, it is continuing to concentrate on researching the advantages of introducing CBDC as well as the possible hazards associated with doing so."
SAMA is doing research on numerous areas of a state-issued digital currency, including the applications of a CBDC-based payment system, the economic effect of the currency, and the preparedness of the market.
In addition to this, it plans to examine the relevant legal, policy, and regulatory aspects.
This action is being taken as part of Saudi Arabia's Vision 2030 programme, which aims to lessen the kingdom's reliance on oil, diversify its economy, and expand public service industries such as healthcare, education, infrastructure, leisure, and tourism by the year 2030.
The governor of SAMA, H.E. Fahad Almubarak, said that local banks and payment businesses would play a significant role in the CBDC project and its execution.
In 2019, SAMA was able to carry out the CBDC experiment known as "Project Aber" with flying colours.
It carried out this investigation in conjunction with the Central Bank of the United Arab Emirates in order to determine whether or not blockchain technology may play a role in international financial transactions.
Late in the year 2020, the banks published a report detailing their research and coming to the conclusion that a dual-issued CBDC was technically viable for facilitating cross-border payments and presented a "significant improvement over centralised payment systems in terms of architectural resilience."
There is no information available on the technology that underpins the Saudi CBDC; nevertheless, CBDC Tracker implies that it is built on the Hyperledger Fabric developed by the Linux Foundation.
The Atlantic Council, a think tank based in the United States, reports that as of right now there are 11 nations that have completely implemented a CBDC and 17 countries that are conducting pilots.
The vast majority of those that have already begun operations are located in the Caribbean, with the exception of one in Nigeria.