AMF: A Practical Guide on CBDC for Arab Central Banks

The accelerating pace of financial technology and digitalization, particularly amid COVID-19, has seen people and businesses are shifting towards electronic payments, accompanied by a rise in financial infrastructure innovation, use of distributed ledger technology (DLT), and the emergence of decentralized finance (DeFi) modes. Due to a responsibility to maintain confidence in currency by ensuring public access to and full usability of central bank money, these trends have led central banks around the globe to explore various aspects of central bank digital currency (CBDC) and digital money, examining and testing diversified use cases for wholesale and retail CBDCs.

Going beyond CBDCs, the notion of a Regulated Liability Network (RLN) reframes CBDC in a broader context including tokenized central bank money, commercial bank money, and electronic money, using DLT and making them exchangeable on financial networks.

A central bank’s conditions, objectives, and priorities determine a central bank’s motivations for issuing and tailoring CBDC. Global experiments are accelerating to test the viability of a CBDC project and assess all related aspects, from design to the examination of the different implications of CBDCs on financial stability, monetary policy, combatting ML/CFT, etc.

In this context, the Arab region is taking an active role in what is happening around the world. Indeed, Arab central banks are interested in further exploring the introduction of CBDCs and they are currently studying their options concerning the most suitable type of digital currency to adopt (wholesale CBDC or retail CBDC) as revealed by the Arab Monetary Fund’s (AMF) recent survey; which showed that 76% of Arab central banks are ...

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