CBDCs in the Middle East and Central Asia

The IMF published a paper on central bank digital currency (CBDC) developments in the Middle East and Central Asia (ME&CA) region. A survey of IMF country teams representing 31 ME&CA countries found that 19 are considering issuing or exploring CBDC, most of which are at the research stage, although a few are at the proof-of-concept (POC) stage (Bahrain, Georgia, Saudi Arabia, United Arab Emirates). Kazakhstan is most advanced in its CBDC journey, having initiated two digital tenge pilots. The region’s fragile and conflict-affected states and low-income countries (LICs) have expressed limited interest. The paper also includes three country case studies (Jordan, Kazakhstan, and Libya). [Read more at the IMF]

(The 31 countries surveyed were Algeria, Armenia, Azerbaijan, Bahrain, Djibouti, Egypt, Georgia, the Islamic Republic of Iran, Iraq, Jordan, Kazakhstan, Kuwait, the Kyrgyz, Republic, Lebanon, Libya, Mauritania, Morocco, Oman, Pakistan, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tajikistan, Tunisia, Turkmenistan, United Arab Emirates, Uzbekistan, West Bank and Gaza, and Yemen.)

There’s a lot to digest here (68 pages of dense detail) and I’m still going through it to figure out when it’s taking about retail, and when it’s talking about wholesale CBDC, in search of new data for my two (retail and wholesale) CBDC databases. The paper is often fuzzy in that regard. But here are two tidbits I found interesting from a first pass:

• The Islamic Republic of Iran, where the “crypto trial” has finished the pre-pilot phase, will run on a platform called Borna, a permissioned DLT platform, meaning the central bank decides which entities have access. The technology was developed using Hyperledger Fabric. Iran has reportedly completed the pre-pilot phase of its “crypto rial,” but details of the project remain limited. [Source: Motamedi, M. 2022. “Why Is Iran Turning to a New ‘Digital Rial?” Aljazeera]

• Central Bank of Bahrain is also testing a wholesale CBDC based on the JPM Coin system, but mainly for interbank transactions instead of cross-border payments.

And this is an interesting nugget, with the IMF enthusiastically pumping Ripple Labs! I guess the authors didn’t read the G20 memo, or maybe the IMF is just trying to poke the U.S. authorities!? From page 5:

“In Georgia, where the focus is on a CBDC’s potential to promote financial inclusion, the central bank has been actively researching CBDC capabilities, design, and potential use cases since 2020 and officially launched a limited access live pilot of the digital lari with Ripple Labs on its cutting-edge CBDC platform.”

FYI I’ll be speaking at the Digital Currency Conference in London on September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at john@kiffmeister.com.