The Qatar Central Bank (QCB) has successfully established the necessary framework for a central bank digital currency (CBDC) project and has initiated the first phase of an experimental undertaking. The primary objective of this initiative is to examine the settlement of significant payments between large local and international banks.
While minimal details regarding the project have been disclosed, the state news agency has indicated that the focus will revolve around distributed ledger technology, artificial intelligence, enhancing liquidity, and transactions involving securities. The project is set to be in operation until October.
The QCB embarked on the study of CBDC technology in March 2022 and subsequently announced the launch of the project in June of the same year. During the Qatar Economic Forum in May, QCB governor Sheikh Bandar bin Mohamed bin Saoud al-Thani stated, “We are currently in the preliminary stage, assessing the advantages and disadvantages of issuing the CBDC.”
Keeping pace with neighboring nations, the United Arab Emirates (UAE) played a crucial role as a founding member of the mBridge project, alongside China, Hong Kong, and Thailand. The UAE has already utilized mBridge to facilitate remittance payments to India and for wholesale transfers among the project participants. Additionally, the UAE collaborated with Saudi Arabia on a CBDC proof-of-concept called Project Aber, which concluded in 2020.
Preceding the announcement of the CBDC project, the QCB introduced a new fintech sandbox, known as the Express Sandbox. This platform offers eligible participants a shortened testing period, efficient testing cycles, and an optimized evaluation process. Similar to the new sandbox, the CBDC project aligns with official national development strategies, although none of these strategies explicitly mention the CBDC.
Cryptocurrency faces disapproval within Qatar, as the Qatar Financial Centre Regulatory Authority prohibited virtual asset services from operating in the country in 2020. The Financial Action Task Force criticized Qatar in 2023 for its failure to enforce this ban and its lack of comprehension regarding “more intricate forms of money laundering and terrorist financing.”
In March, rumors circulated within the crypto community suggesting that the Qatar Investment Authority would make substantial investments in Bitcoin (BTC). However, doubts persist regarding the likelihood of this occurring.
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