The Qatar Central Bank has completed the infrastructure for the Central Digital Currency (CBDC) project and launched the first phase of the pilot project, through which the central bank will consider settling large payments between large local and international banks. Few details have been revealed about the project.
The government news agency said it will focus on distributed ledger technology, artificial intelligence, enhancing liquidity, and settling securities transactions, and the project will continue until October.
The Qatar Central Bank began studying CBDC technology in March 2022 and confirmed that it would launch a project in June of that year.
According to a press report, the Governor of the Qatar Central Bank, His Excellency Sheikh Bandar bin Mohammed bin Saud Al Thani, said at the Qatar Economic Forum in May: “We are still in the establishment phase. At the moment, we are evaluating the pros and cons of issuing a central bank digital currency.”
Keeping pace with neighboring countries
The neighboring UAE was a founding member of the mBridge project, along with China, Hong Kong, and Thailand.
The country has already used mBridge to transfer payments to India, in addition to making bulk transfers between mBridge project members.
The UAE also participated in proving the concept of a central bank digital currency, through the “Aber” project, which was developed with the Kingdom of Saudi Arabia and ended in 2020.
One day before announcing the central bank digital currency project, the Qatar Central Bank launched a new fintech sandbox.
The Express Test Fund provides a reduced testing period and accelerated testing cycles, as well as a simplified comprehensive evaluation process for eligible participants.
Similar to the new sandbox, the CBDC project has been described as part of official national development strategies, although none of the strategies explicitly mention a CBDC.
Cryptocurrencies are not popular
The Qatar Financial Center Regulatory Authority — the country’s business development jurisdiction — 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 its lack of understanding of more complex forms of money laundering and terrorist financing.
In March, rumors circulated in the cryptocurrency community that the Qatar Investment Authority would invest heavily in Bitcoin, but there are doubts about the possibility of this happening.
