FameEX Hot Topics | Qatar Central Bank Initiates First Phase of Its CBDC Project

The Qatar Central Bank (QCB) has launched the first phase of its experimental central bank digital currency (CBDC) project, marking a significant step in integrating CBDC into the country's financial infrastructure. The initiative, positioned as a key component of Qatar's national development strategy, focuses on large payment settlements among major local and international banks, employing cutting-edge technologies such as distributed ledger and artificial intelligence to enhance liquidity and securities transactions. This phase of the project is scheduled to continue through October.

QCB's engagement with CBDC technology began in March 2022, and by June of that year, the bank officially announced the project's commencement. Speaking at the Qatar Economic Forum in May, QCB Governor Sheikh Bandar bin Mohamed bin Saoud al-Thani emphasized the foundational stage of the project, highlighting the ongoing evaluation of the advantages and risks associated with launching a CBDC.

Regionally, the United Arab Emirates (UAE), a close neighbor, has also been active in similar initiatives. The UAE was a founding member of the mBridge project, which has facilitated remittance payments to India and wholesale transfers among member banks. Additionally, the UAE participated in Project Aber, a CBDC proof-of-concept with Saudi Arabia, which concluded in 2020.

Parallel to the CBDC project, the QCB introduced a new fintech sandbox on the preceding day, named the Express Sandbox. This platform offers a streamlined testing process with rapid cycles and a reduced overall evaluation period, aimed at accelerating fintech innovation within the country. Both the CBDC initiative and the new sandbox are integral to Qatar’s broader national development plans, although these strategies do not explicitly mention CBDCs.

In contrast, the Qatar Financial Centre Regulatory Authority, which oversees a business development jurisdiction, imposed a ban on virtual asset services in 2020. The country faced criticism from the Financial Action Task Force in 2023 for inadequate enforcement of this ban and a lack of comprehension regarding complex forms of money laundering and terrorist financing. This situation underscores the delicate balance Qatar must maintain as it advances its financial technology while addressing regulatory challenges.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.