S. Arabia enters BIS-led central bank digital currency trial

By Aya Anwar On Jun 5, 2024

The Bank for International Settlements (BIS) announced that Saudi Arabia’s central bank will be a “full participant” in Project mBridge, initiated in 2021 with collaboration from the central banks of China, Hong Kong, Thailand, and the United Arab Emirates.

Saudi Arabia’s participation in a significant BIS-led trial for central bank digital currency (CBDC) marks a potential shift away from the dominance of the US dollar in global oil trade, Reuters reported on Wednesday.

According to the BIS, mBridge has reached the “minimum viable product” stage, indicating progress beyond the prototype phase.

Approximately 135 countries and currency unions, representing 98 per cent of global GDP, are exploring CBDCs. However, the intricate technologies involved pose technical and political challenges for cross-border transactions.

Josh Lipsky, overseeing a global CBDC tracker at the US-based Atlantic Council, noted: “The most advanced cross-border CBDC project just added a major G20 economy and the largest oil exporter in the world.” He anticipates a scaling up of commodity settlement on the platform outside of dollars in the coming year.

Transactions on mBridge can utilise the code underlying China’s e-yuan, accessible to the project’s 26 other “observing members,” including entities like the New York branch of the Federal Reserve, the International Monetary Fund (IMF), and the European Central Bank.

The BIS mentioned that the mBridge platform is now compatible with the Ethereum Virtual Machine, a foundational software component of the Ether cryptocurrency network, making it a testbed.