Last week the World Economic Forum (WEF) held a Middle East Special Meeting, during which central bank digital currency (CBDC) was discussed. Cross border CBDC is a priority for both the Saudi and Bahraini central banks. In contrast, the International Monetary Fund (IMF) sees potential for a retail CBDC to improve financial inclusion. The Governor of the Bank of Bahrain also hypothesized about the attractions of an interest bearing retail CBDC.
Jihad Azour, the IMF Director for Middle East and Central Asia (MECA), sees a huge opportunity for CBDC given the low rate of digital payments in MECA (40%) compared to South East Asia (80%). There’s great potential because the region also has a very high rate of telecom and internet penetration.
However, he also noted the tremendous disparity between countries. A recent IMF CBDC report about the region shows that the Gulf Cooperation Council countries – including Saudi Arabia and Bahrain – have a far higher digital payment rate of around 75%.
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