The Qatar Central Bank (QCB) has completed the infrastructure for its central bank digital currency (CBDC) project and has initiated the first phase of an experimental trial. This phase will focus on settling large payments among both local and international banks, reflecting Qatar’s national development strategy.
Project Details and Objectives
While specific details are limited, the state news agency indicated that the project will emphasize the use of distributed ledger technology, artificial intelligence, and enhancements in liquidity and securities transactions. The initial phase of the project is set to continue through October.
Development Timeline
The QCB started exploring CBDC technology in March 2022 and officially announced the project in June of the same year. At the Qatar Economic Forum in May, QCB governor Sheikh Bandar bin Mohamed bin Saoud al-Thani mentioned, “We are in the foundation stage and evaluating the pros and cons of issuing the CBDC.”
Regional Context and Comparisons
Qatar’s move towards a CBDC is part of a broader trend in the region. The United Arab Emirates (UAE), a neighboring country, was a founding member of the mBridge project along with China, Hong Kong, and Thailand. The UAE has successfully used mBridge for remittance payments to India and for wholesale transfers among its members. Additionally, the UAE participated in Project Aber, a CBDC proof-of-concept with Saudi Arabia that concluded in 2020.
Fintech Sandbox Launch
Coinciding with the CBDC project announcement, the QCB also launched a new fintech sandbox called the Express Sandbox. This initiative offers a reduced testing period, rapid testing cycles, and a streamlined overall evaluation process for eligible participants. Both the sandbox and the CBDC project are part of Qatar’s broader national development strategies, despite these strategies not explicitly mentioning CBDCs.
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Stance on Cryptocurrency
Despite its advancements in digital currency, Qatar maintains a cautious stance on cryptocurrencies. In 2020, the Qatar Financial Centre Regulatory Authority banned virtual asset services from operating in the country. In 2023, the Financial Action Task Force criticized Qatar for not enforcing this ban and for lacking an understanding of more complex forms of money laundering and terrorist financing.
Rumors surfaced in March that the Qatar Investment Authority might invest heavily in Bitcoin, but these claims remain doubtful and speculative.
