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- Saudi Arabia joins the mBridge project as a full participant, fostering an innovative cross-border payments infrastructure.
- Experts anticipate that the oil producer may leverage the CBDC project for oil trade payments.
- The program intends to lessen the use of US Dollars in oil trade between China and Saudi Arabia.
In a major development, Saudi Arabia has joined mBridge, a central bank digital currency (CBDC) initiative focused on international trade. The Saudi Arabian central bank, SAMA, aims to build a more innovative infrastructure for cross-border payments through this new venture.
This oil-rich nation’s adoption of CBDC has experts speculating that it may use the project to facilitate oil trade payments. With 26 observers including the IMF, World Bank, and ECB, Saudi Arabia becomes the sixth official member of mBridge.
According to a June 5th Reuters report, Saudi Arabia’s participation in the mBridge project, led by China, marks the initial step. The program aims to reduce reliance on the US dollar for China-Saudi Arabia oil trade.
Launched in 2021, the mBridge project is a collaborative effort between the Bank for International Settlements’ innovation arm, the Bank of Thailand, the United Arab Emirates’ central bank, China’s Digital Currency Institute, and the Hong Kong Monetary Authority. The project’s goal is to establish a shared CBDC platform for wholesale cross-border payments and settlements.
Commenting on this strategic move by Saudi Arabia, Josh Lipsky, Senior Director at the Atlantic Council’s GeoEconomics Center, said:
“The most advanced cross-border CBDC project just added a major G20 economy and the largest oil exporter in the world, 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 Bank for International Settlements (BIS) announced that mBridge has reached its minimum viable product (MVP) stage. This signifies the project’s progression beyond the prototype phase.
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