CBDC is one of the most widely discussed topics in today’s financial industry. From the time since the idea of creating digital currencies that would be officially controlled by the government was first introduced, the popularity of this idea rapidly grew. If months ago only a few countries agreed to implement Central Bank Digital Currency in their financial system, now more and more countries are thinking of creating a digital form of their national currency.
Currently, several countries are in the process of conducting trials in order to see how this technique will work and whether it will be beneficial for their economy or not. As analysis shows, at this moment China is a real pioneer in the CBDC space, alongside Sweden. Actually, Sweden was the first country that tested the world’s first central bank digital currency and found out that e-krona will eventually stimulate everyday baking activities and benefit the financial sector. But it’s not only digital Yuan and digital krona that are expected to have great performance and African countries also try to test their own CBDCs carefully. And Saudi Arabia and the UAE are among those successful African nations that have already conducted trials to examine how effective these digital currencies are for their economics.
Saudi Arabia is now officially closer to implementing central bank digital currencies in its financial system. Saudi Arabian Monetary Authority and the central bank of the UAE recently published a report where they are discussing the results of the first trial about CBDC. This report from one of the most powerful countries in the Middle East shows the key benefits of this new digital currency, stating that a distributing payment system has the potential to function much more effectively in their countries than a centralized payment structure.
There are many reasons for the possible success of CBDCs in these powerful economies. First of all, after the lockdown, the internet penetration rate has increased in African nations and now these countries have much higher chances to effectively switch to digital currencies than ever. The rate of mobile usage in the economies of both the UAE and Saudi Arabia is moving upwards quickly and therefore, not surprisingly digital money can actually have some significant benefits.