The Qatar Central Bank (QCB) has completed the infrastructure for a central bank digital currency (CBDC) project and launched the first phase of an experimental project. The QCB will look at settlements of large payments among large local and international banks.
Few details of the project were released. The state news agency said it would focus on distributed ledger technology, artificial intelligence, enhancing liquidity and transactions with securities. The project will run through October.
The QCB began studying CBDC technology in March 2022 and confirmed that it was launching a project in June of that year. According to a press report, QCB governor Sheikh Bandar bin Mohamed bin Saoud al-Thani said at the Qatar Economic Forum in May, "We are in the foundation stage and evaluating the pros and cons of issuing the CBDC."
Keeping up with the neighbors
The neighboring United Arab Emirates (UAE) was a founding member of the mBridge project, along with China, Hong Kong and Thailand. It has already used mBridge to transfer remittance payments to India and for wholesale transfers among the mBridge project members. The UAE also participated in a CBDC proof-of-concept, called Project Aber, with Saudi Arabia that ended in 2020.
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A day before the announcement of the CBDC project, the QCB launched a new fintech sandbox. The Express Sandbox offers a “reduced testing period, rapid testing cycles, and a streamlined overall evaluation process” for eligible participants. Like the new sandbox, the CBDC project was described as part of official national development strategies, although none of the strategies mention CBDC explicitly.
Cryptocurrency frowned on
The Qatar Financial Centre Regulatory Authority — a business development jurisdiction in the country — banned virtual asset services from operating there in 2020. The Financial Action Task Force criticized Qatar in 2023 for not enforcing that ban and lacking an understanding of “more complex forms of money laundering and terrorist financing.”
Rumors circulated in the crypto community in March that the Qatar Investment Authority would invest heavily in Bitcoin (BTC), but there is doubt about the likelihood of that.
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