January 25, 2023

Saudi Arabia Studies Issuing Digital Riyal

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The Saudi Central Bank, known as SAMA, is conducting experiments to test the launch of its central bank digital currency (CBDC) in cooperation with other financial institutions and fintech companies, according to the Saudi Press Agency (SPA).

SAMA is currently studying the market readiness, economic impact, potential, and efficiency of the new digital currency, in addition to swift applications for payment solutions using digital currency. The bank also explores the legal and regulatory frameworks and policy issues to introduce Saudi CBDC.

Fahd bin Abdullah Al-Mubarak, the SAMA governor, stressed the importance of involving local banks and payment firms in this project as they are a main cornerstone of this process and its implementation. Mubarak also affirmed the necessity of the participation of market players and third-party advisory and technical service providers in the implementation process to understand the digital currency’s functions and test different options.

According to him, the central bank will continue to consult international agencies, local government agencies, and the public to benefit from their expertise. He also pointed out that the central banks of Saudi Arabia and the UAE are working together on a project called “Aber” through which they discuss the possibility of issuing a digital currency for use between them.

The project aims to promote a cross-border payment system that will decrease transfer times and costs between the two Gulf states’ banks.

Saudi Arabia is not only the first Arab country which is studying the issuance of digital currency. Egypt and Morocco are doing the same and are expected to issue a regulatory framework in this matter soon. Also, Bank Al-Maghrib (BAM) expressed its readiness for launching a bill regulating the crypto market.

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