The Qatar Central Bank (QCB) has successfully completed the necessary groundwork for a central bank digital currency (CBDC) initiative and has now initiated the first phase of an experimental project. The QCB’s focus will be on settling large payments between major local and international banks.
While specific details about the project remain scarce, the state news agency has indicated that it will concentrate on distributed ledger technology, artificial intelligence, and improving liquidity and transactions involving securities. The project is set to run until October.
The QCB initiated its study of CBDC technology in March 2022 and subsequently confirmed the launch of a project in June of the same year. QCB governor Sheikh Bandar bin Mohamed bin Saoud al-Thani mentioned during the Qatar Economic Forum in May that they are in the early stages of evaluation and weighing the pros and cons of issuing a CBDC.
The United Arab Emirates (UAE), a neighboring country, has already been involved in CBDC projects. As a founding member of the mBridge project, alongside China, Hong Kong, and Thailand, the UAE has utilized mBridge for remittance payments to India and wholesale transfers among project members. Additionally, the UAE participated in a CBDC proof-of-concept project called Project Aber with Saudi Arabia, which concluded in 2020.
In conjunction with the announcement of the CBDC project, the QCB has also launched a new fintech sandbox called the Express Sandbox. This sandbox offers eligible participants a shortened testing period, faster testing cycles, and an overall streamlined evaluation process. Both the new sandbox and the CBDC project are part of official national development strategies, although none of these strategies explicitly mention CBDC.
Cryptocurrency has not been well-received in Qatar, as the Qatar Financial Centre Regulatory Authority banned virtual asset services from operating in the country in 2020. In 2023, the Financial Action Task Force criticized Qatar for not enforcing this ban and for lacking an understanding of more sophisticated forms of money laundering and terrorist financing.
In March, rumors circulated within the crypto community that the Qatar Investment Authority would make significant investments in Bitcoin (BTC). However, doubts persist regarding the likelihood of this happening.
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