Saudi Arabia joins BIS-led central bank digital currency trial
Technology
Saudi Arabia joins BIS-led central bank digital currency trial
LONDON (Reuters) - Saudi Arabia has joined a major BIS-led central bank digital currency cross-border trial, in what could be another step towards less of the world's oil trade being done in US dollars.
The move, announced by the Bank for International Settlements on Wednesday, will see Saudi's central bank become a "full participant" of Project mBridge, a collaboration launched in 2021 between the central banks of China, Hong Kong, Thailand and the United Arab Emirates.
The BIS, a global central bank umbrella organisation that oversees the project, also announced that mBridge had reached the "minimum viable product" stage, meaning it will move beyond the pro-type phase.
Roughly 135 countries and currency unions, representing 98% of global GDP, are exploring central bank digital currencies, or CBDCs. However, the new technologies they use make cross-border movement both technically challenging and politically sensitive.
"The most advanced cross-border CBDC project just added a major G20 economy and the largest oil exporter in the world," said Josh Lipsky, who runs a global CBDC tracker, at the US-based Atlantic Council.
"This means in the coming year you can expect to see a scaling up of commodity settlement on the platform outside of dollars – something that was already underway between China and Saudi Arabia but now has new technology behind it."
The mBridge transactions can use the code China's e-yuan is built on.
That code is also available to the project's 26 other "observing members" which include the likes of the New York branch of the Federal Reserve, the International Monetary Fund and the European Central Bank.
The BIS said the mBridge platform was now compatible with the Ethereum Virtual Machine - a piece of software that forms the backbone of the network used by the Ether cryptocurrency.
"This allows it to be a testbed," it said.
