Saudi Arabia has recently become a key participant in a cross-border trial for central bank digital currency (CBDC) led by China. This collaboration, known as Project mBridge, involves central banks from China, Hong Kong, Thailand, and the United Arab Emirates, with the Bank for International Settlements (BIS) overseeing the project.
The inclusion of Saudi Arabia in this trial signifies a potential shift in the global oil trade’s reliance on the U.S. dollar. Project mBridge has now advanced to the “minimum viable product” stage, indicating progress beyond the initial prototype phase.
As CBDCs gain attention from around 135 countries and currency unions worldwide, representing 98% of global GDP, the implementation of these technologies for cross-border transactions presents both technical complexities and political sensitivities.
Josh Lipsky from the Atlantic Council, an organization monitoring global CBDC developments, highlighted the significance of Saudi Arabia joining the project. This move could potentially accelerate commodity settlements on the platform outside of the U.S. dollar, aligning with existing trends between China and Saudi Arabia.
mBridge transactions are built on the foundation of China’s e-yuan code, accessible to 26 other “observing members,” including institutions like the New York branch of the Federal Reserve, the International Monetary Fund, and the European Central Bank. The BIS also announced that the mBridge platform now integrates with the Ethereum Virtual Machine, enhancing its capabilities as a testing ground for future innovations in the cryptocurrency space.
Overall, the addition of Saudi Arabia to the central bank digital currency trial led by China marks a significant development in the evolving landscape of global financial transactions.
