Bahrain’s central bank (CBB), located in the Middle East, has announced that it will conduct experiments on digital currency settlement in partnership with US investment bank JPMorgan. In the future, it plans to expand into CBDC (Central Bank Digital Currency).
Bank ABC, a commercial bank in Bahrain, and JP Morgan in the United States will conduct a pilot test (experiment) of cross-border payments in Bahrain. The payments will be made in US dollars, and experiments will help buyers and suppliers to make payments faster and eliminate the need to prepare funds in advance.
The Kingdom of Bahrain, located in the Middle East, has a friendly relationship with Japan and the United States, and is considered to be one of the Middle Eastern nations that is also active in expanding the financial and tourism industries, such as holding the F1 World Championship “Bahrain GP”. .. Bank ABC, which will participate in this experiment, will be an international financial bank based in Bahrain.
The CBB said in a press release that it is considering CBDC experiments in the future.
The Central Bank of Bahrain has acted as a close partner for the experiments by Bank ABC and JP Morgan, and plans to expand its cooperation with the Central Bank Digital Currency in the future.
“Through this pilot test between JP Morgan and Bank ABC, we want to address the inefficiencies and challenges of traditional cross-border payments,” said CBB President Rashid Mohammed al-Malaji.
In addition, JP Morgan’s wholesale settlement VP, Ali Moosa, commented as follows, showing that JP Morgan’s ONYX is involved in the experiment.
JP Morgan’s ONYX was founded on a mission to lead the construction of next-generation clearing and payment infrastructure, partnering with leading central banks and regulators like CBB, and a partner called Bank ABC for innovation. However, I am happy to be able to move forward with the construction of next-generation payment and payment infrastructure.
ONYX will be the department that oversees the blockchain project that JP Morgan has been working on. So far, there are Liink, an interbank information network, and JPM Coin. Liink changed its name from the Interbank Information Network in October 2020.
Growing interest in CBDC in the Middle East
Bahrain is not the only country in the Middle East working on the CBDC. The United Arab Emirates and Saudi Arabia have conducted a demonstration experiment on the CBDC for about two years and announced the results in November 2020.
According to the verification results of the experiment named Aber Project, the results exceeded expectations, and the usefulness as a substitute means such as real-time gross settlement and DvP settlement was described as a future application.
Relation:UAE and Saudi Arabia announce results of proof-of-concept test of central bank digital currency
Dubai, United Arab Emirates, is also working on its own, with the Financial Services Authority (DFSA) moving towards legislation on digital assets. The Middle East, which is trying to break away from the oil-dependent economy, is also active in accepting financial innovation, and the movement will continue to be watched.