Qatar Central Bank Initiates First Phase of Digital Currency Experiment Amid New Fintech Developments
Summary:
Qatar Central Bank (QCB) has initiated the first phase of a central bank digital currency (CBDC) experimental project after completing the required infrastructure. This experiment focuses on examining substantial payments between major domestic and international banks. Concurrently, the QCB has launched a new fintech sandbox named "Express Sandbox" intended to expedite product testing and evaluation. These developments form part of the country's national development strategies. However, the country maintains a restrictive stance against cryptocurrencies, having previously banned virtual asset services in 2020.
Following the creation of a necessary infrastructure, the Qatar Central Bank (QCB) has commenced the preliminary phase of a central bank digital currency (CBDC) experiment. This initiative will analyze the settlement of substantial payments between major domestic and international banks. While specifics about the project remain scarce, the national news agency mentioned that it would center on artificial intelligence, distributed ledger technology, improving liquidity, and transactions involving securities. The project is anticipated to last until October.
Beginning in March 2022, QCB started exploring CBDC technology and announced the launch of an initiative three months later, in June. QCB's governor, Sheikh Bandar bin Mohamed bin Saoud al-Thani, addressed the Qatar Economic Forum in May, saying, "We are currently laying the groundwork and considering the potential benefits and drawbacks of issuing a CBDC."
The nearby United Arab Emirates (UAE) is keeping pace by becoming an original member of the mBridge project with China, Hong Kong, and Thailand. Remittance payments to India and wholesale money transfers between mBridge members have already been processed using mBridge. Additionally, the UAE partnered with Saudi Arabia in a CBDC proof-of-study, named "Project Aber," which concluded in 2020.
Notably, a day before the CBDC project announcement, QCB introduced a new fintech sandbox, termed "Express Sandbox", providing a concise test period, expedited testing rounds, and a simplified appraisal procedure for suitable participants. The CBDC project, like the freshly launched sandbox, is recognized as part of the country's official national development plans, although CBDC is not explicitly mentioned in any of these strategies.
Cryptocurrency, however, isn’t as welcome in Qatar. The Qatar Financial Centre Regulatory Authority, a business development jurisdiction in the nation, prohibited virtual asset services from functioning within its boundaries in 2020. The Financial Action Task Force criticized the country in 2023 for inadequate enforcement of the ban, coupled with a lack of comprehension of complex money laundering and terrorist funding modalities. Despite rumors in the crypto community suggesting a significant investment in Bitcoin (BTC) by the Qatar Investment Authority, skepticism about the probability of this continues to linger.
Published At
6/3/2024 8:39:30 PM
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