On Monday the Saudi Arabia Monetary Authority (SAMA) said it was continuing its central bank digital currency (CBDC) experiments focusing on a domestic wholesale CBDC. In other words to be used for payments between financial institutions, including banks and fintechs.
Its focus is on exploring the economic impact, the readiness of participants, and the potential for wholesale CBDC applications. At the same time, it is looking at policy and legal implications.
The central bank confirmed that no decision has been made about introducing a CBDC.
While the current experiments are domestic, SAMA was one of the earlier central banks to explore cross border payments with the UAE back in 2019, Project Aber. It was a novel trial because the central banks shared a common CBDC, which was viable since both the Gulf currencies are pegged to the U.S. dollar.
The UAE has gone on to participate in Project MBridge, a cross border CBDC project also involving the central banks of Thailand, Hong Kong and China.
Elsewhere in the Gulf, the Central Bank of Bahrain tested JP Morgan’s JPM Coin digital currency solution in 2021.
Meanwhile, back in 2020, SAMA used a blockchain solution to transfer money to local banks as part of efforts to inject liquidity into the banking system in the early days of COVID.