The Qatar Central Bank (QCB) has developed the infrastructure for its Central Bank Digital Currency (CBDC) project, marking a significant step towards building a digital economy in Qatar. The project's first experimental phase will run until October 2024, focusing on leveraging artificial intelligence, distributed ledger technology and emerging technologies.
The primary objectives of the CBDC project include enhancing liquidity by expanding participation in financial market facilities and ensuring information security during implementation. According to QCB, the experiment will help identify future use cases to improve current systems and enable instant settlement.
Following a comprehensive study, QCB will test and develop selected applications for the CBDC, aiming to settle large payments with local and international banks using advanced technologies. The project will also focus on increasing access to capital markets for operating banks, enhancing domestic settlement and improving securities transaction efficiency.
This initiative aligns with the Third Financial Sector Strategy, the Fintech Strategy and Qatar National Vision 2030, reflecting QCB's efforts to regulate and develop the financial sector. The QCB aims to keep pace with digital transformations in the financial and banking sectors regionally and globally, emphasizing the need to invest in modern technologies.
CBDCs represent a digital form of a country's fiat currency managed by the central bank. Reports suggest the Middle East, including Qatar, is well-positioned to benefit from CBDCs amid shifting energy and global trade trends.
At the Qatar Economic Forum, QCB Governor Sheikh Bandar bin Mohamed bin Saoud al-Thani stated that the bank is currently evaluating the pros and cons of issuing the CBDC. The initiative is part of QCB's ongoing commitment to fostering growth in the financial sector and promoting technological innovations.
Globally, 87 countries, accounting for over 90% of global GDP, are exploring CBDC initiatives. The UAE Central Bank and the Central Bank of Bahrain are also progressing with their digital currency projects. The UAE plans to launch its digital currency as part of its 2023-26 strategy, while Bahrain has started a cross-border digital currency settlement pilot program with JP Morgan and Bank ABC.