As the adoption of digital assets continues to grow widely, entities are following suit while aiming to use digital assets in their own way. In today’s news, the Saudi Central Bank (SAMA) unveiled its plan to experiment with central bank digital currency (CBDC) alongside local banks and fintech firms in a phase-by-phase project.
According to the agency, its current phase is where it centers on leveraging CBDC as a useful tool for a type of domestic wholesale financial instrument in collaboration with other financial institutions.
Saudi Central Bank Pushes Forward With CBDC
At the current stage, the central bank is exploring several sectors including the economic impact, market viability, and potential application of CBDC-based payment solutions. Therefore, the plan to launch the centrally-backed currency may be delayed as the decision is still pending.
Saudi-based news outlet Saudi Gazette noted in a report published on January 23 that “The Saudi Central Bank (SAMA) stressed that no decision has been made regarding the introduction of the Central Bank Digital Currency (CBDC) in the Kingdom. It continues to focus on exploring the benefits and potential risks of implementing CBDC.”
Furthermore, according to the news outlet, the SAMA focus will devote “informed decision-making” within the central bank and to CBDC research within the central banking ecosystem.
Following its devotion to moving forward, SAMA searches for proper assessment of policy, and legal and regulatory considerations before proceeding to the next phases of the CBDC experiment plan to be a part of the Saudi Vision 2030 goals.
The region’s Vision 2030 goal is a future embedded with advanced technologies. The SAMA Governor Fahad Almubarak said local banks and payment companies are the cornerstones of the project and its implementation.
Relative international bodies, local government entities, and the public are part of the institutions the SAMA will be consulting while researching CBDC.
At the end of the note, the report mentioned that SAMA will only continue to experiment with the CBDC solution as an infrastructure enabler of innovation in financial services that can be a part of an ecosystem with more resilient payment methods and an advanced digital transformation in the local financial sector.
Saudi Interest In The Crypto Sector
Prior to getting this far with its CBDC project, Saudi Arabia already demonstrated interest in the crypto community. A week ago, the region hit back at the U.S. dollar (USD) supremacy for the benefit of giving other currencies such as Bitcoin and other global currencies a chance.
During the World Economic Forum (WEF) in Davos, the country’s minister of finance, Mohammed Al-Jadaan, hinted at the possibility of accepting non-dollar currencies to trade oil.
While notable bodies are beginning to recognize and pick an interest in cryptocurrencies as a legal means of payment method, the cryptocurrency market has seen positive movements.
In the last 7 days, the global cryptocurrency market capitalization has been hovering above $1 trillion as digital assets underneath continue to rally.
Featured image from Unsplash, Chart from TradingView