Saudi Arabia Explores Blockchain and CBDC to Reduce Cash Use
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Answer Saudi Arabia Explores Blockchain and CBDC to Reduce Cash Use
Press reports have emerged that the Central Bank of Saudi Arabia, known as the Saudi Central Bank “SAMA”, is exploring the risks and benefits associated with various emerging technologies, including blockchain technology.
However, the main bank has no plans at the moment to stop fiat currencies, with a representative of the Saudi Central Bank indicated that there are no plans to abolish physical cash.
Explore for new technologies without forfeiting coins:
While speaking in an interview with a local news agency, “economic”The representative of the Saudi Central Bank pointed to the increasing importance of the central bank “CBDC” digital currencies globally.
According to the spokesperson, many major banks are still in the early stages of their own CBDC digital currency projects, as they are either in research, trial or at the proof-of-concept stage.
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The representative of the Saudi Central Bank also said that most “CBDC” projects benefit from blockchain technology, due to the properties and benefits associated with the blockchain.
As is well known, “CBDC” is a digital version of a country’s fiat currency, which is usually issued and controlled by the central bank.
Financial institutions believe that central bank digital currencies can make conversion and settlement times faster, more efficient, and less expensive.
The centralized nature of sovereign digital currencies also enables central banks to maintain control over the payment system.
Meanwhile, Saudi Arabia was one of the first countries to explore CBDC in January 2019, when the country’s central bank announced the launch of a digital currency project called “Aber”, in cooperation with the UAE’s main bank in the UAE.
One of the goals of the pilot was to explore the use of digital currency for cross-border settlement, with the project using DLT technology.
Saudi Arabia is working to increase electronic payments to 70% by 2025, and SAMA does not plan to remove physical cash.
According to a central bank spokesperson, the bank is looking to make cash and digital payments coexist, in order to enable citizens to complete transactions with what they prefer.
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