The Qatar Central Bank (QCB) has taken a big step in the digital currency world by completing the groundwork for a central bank digital currency (CBDC) project. The first phase of this project has been launched, focusing on settling large payments among local and international banks.
While not much information has been disclosed about the project, the state news agency highlighted its emphasis on cutting-edge technologies like distributed ledger technology and artificial intelligence. The project aims to improve liquidity and transactions involving securities, and it’s scheduled to run until October.
Qatar QCB’s Journey into CBDC Territory
The QCB began exploring CBDC technology back in March 2022, and by June of the same year, it had confirmed the launch of the project. QCB governor Sheikh Bandar bin Mohamed bin Saoud al-Thani shared insights at the Qatar Economic Forum, stating that they’re in the foundational stage, evaluating the potential benefits and drawbacks of issuing a CBDC.
The United Arab Emirates (UAE) has been actively involved in digital currency initiatives. As a founding member of the mBridge project alongside China, Hong Kong, and Thailand, the UAE has already utilized mBridge for remittance payments to India and wholesale transfers among project members. Additionally, the UAE collaborated with Saudi Arabia on a CBDC proof-of-concept called Project Aber, which concluded in 2020.
QCB’s Latest Moves
Just ahead of announcing the CBDC project, the QCB introduced a new fintech sandbox named Express Sandbox. This initiative aims to provide eligible participants with quicker testing cycles and streamlined evaluation processes. Both the sandbox and the CBDC project align with official national development strategies, although CBDCs aren’t explicitly mentioned in these strategies.
Regulatory Landscape and Challenges in Qatar
Despite its advancements in digital finance, Qatar has faced regulatory challenges. In 2020, the Qatar Financial Centre Regulatory Authority prohibited virtual asset services from operating within the jurisdiction. However, criticism from the Financial Action Task Force in 2023 highlighted Qatar’s shortcomings in enforcing this ban and understanding complex financial crimes.
In March, rumors swirled in the crypto community regarding potential heavy investments in Bitcoin by the Qatar Investment Authority. However, doubts linger regarding the likelihood of such investments materializing.
