Saudi Arabia Joins China and the UAE in CBDC Project mBridge Led by Switzerland’s BIS
After collaborating with the UAE on the “Aber” digital currency project, Saudi Arabia is now joining a broader CBDC initiative with multiple international central banks.
- Saudi Arabia has become a full participant in the BIS-led mBridge project with central banks from China, Thailand, and the UAE.
- The mBridge project has reached the MVP stage, inviting private firms to propose solutions.
- Saudi Arabia is still assessing risks and has yet to launch its own CBDC.
The Central Bank of Saudi Arabia (SAMA) has become a full participant in mBridge, a collaborative cross-border initiative led by the Switzerland-based Bank for International Settlements (BIS) involving multiple international central bank digital currencies (CBDCs).
Having only collaborated with the UAE through Project Aber, Saudi Arabia now joins other central banks from China, Thailand, and Hong Kong through the mBridge project. Despite being a full member, the Arabian Peninsula country has yet to launch its own CBDC.
From Project Aber to mBridge
Saudi Arabia and the UAE collaborated on Project Aber in 2019 to explore the use of CBDC for digital cross-border payments. At the project’s conclusion, the highlighted next step was expansion.
“Although Aber sought to prove the viability of a single Digital Currency as an instrument of cross-border settlement, there is also potential to expand it (to) accommodate multiple digital representations of fiat currencies.”
Although Saudi Arabia joins the limited full participants of mBridge, the project has over 26 observing members, including the World Bank, the International Monetary Fund, and central banks from Israel, Korea, Europe, Australia, and New York. Among the mBridge participants, China is conducting the largest CBDC pilot, reaching 260 million people and covering 200 scenarios from e-commerce to government payments.
The BIS also recently announced that mBridge, launched in 2021, has reached the minimum viable product (MVP) stage, inviting private sector firms to “propose solutions and use cases” to improve the platform and reach its full potential.
Only the Bahamas, Jamaica, and Nigeria have officially launched their own CBDCs. India, Brazil, and Russia aim to launch digital currencies within the next one to two years, while the European Central Bank is developing a digital euro pilot, potentially launching by 2028.
Why Hasn’t Saudi Arabia Launched Its Own CBDC?
Complexities around CBDCs include compliance with laws on anti-money laundering (AML) and combating the financing of terrorism (CFT). Implementing a digital currency would require SAMA to have robust customer due diligence, record-keeping, and countering mechanisms to mitigate AML/CFT risks.
In early 2023, SAMA said it was exploring domestic wholesale CBDC use cases for local banks and FinTechs but hadn’t decided on launching its own CBDC. Now, Saudi Arabia’s central bank is still weighing risks and forming a strategy aligned with Saudi Vision 2030 for economic diversification.
As a full participant in mBridge, Saudi Arabia can expand its cross-border CBDC research from just the UAE to other international scenarios, experimenting with a broader range of cross-border transactions with other participants.
