Qatar Central Bank launches Phase 1 of CBDC project

Qatar Central Bank (QCB) has completed the infrastructure for its central bank digital currency (CBDC) project and has launched the first phase of the experimental project. The QCB will investigate the settlement of large payments between large domestic and international banks.

Few details of the project have been released. The state-run telecom company said it would focus on distributed ledger technology, artificial intelligence, liquidity enhancement and securities trading. The project is scheduled to run until October.

QCB began research on CBDC technology in March 2022 and confirmed that the project would begin in June of that year. According to media reports, QCB Governor Sheikh Bandar bin Mohammed bin Saud Al Thani said at the Qatar Economic Forum in May, “We are at the basic stage and are evaluating the pros and cons of issuing a CBDC.”

Get together with your neighbors

The neighboring United Arab Emirates (UAE) was a founding member of the mBridge project, along with China, Hong Kong and Thailand. We have already used mBridge to transfer remittance payments to India and perform wholesale transfers between mBridge project members. The UAE also participated in a CBDC proof-of-concept called Project Aber with Saudi Arabia, which ended in 2020.

Related: Sharia law allows cryptocurrency trading, but it is highly unlikely to be fully adopted.

A day before the announcement of the CBDC project, QCB launched a new fintech sandbox. Express Sandbox offers qualified participants “a shortened testing period, faster testing cycles, and a streamlined overall evaluation process.” Like the new sandbox, the CBDC project was described as part of the official national development strategy, although neither strategy explicitly mentioned CBDC.

Cryptocurrency is frowned upon

The Qatar Financial Centers Regulatory Authority (Qatar’s business development jurisdiction) banned the operation of virtual asset services in 2020. The Financial Action Task Force criticized Qatar in 2023 for failing to enforce the ban and lacking understanding of “more complex forms of money.” Laundering and terrorist financing.”

Last March, rumors circulated in the cryptocurrency community that the Qatar Investment Authority would make a significant investment in Bitcoin (BTC), but doubts were raised about the possibility of that happening.

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