Qatar Central Bank (QCB) has successfully completed the development of its infrastructure for a central bank digital currency (CBDC). In an announcement on Sunday, the national bank stated that it aims to test large payment settlements using advanced technologies and will collaborate with local and international banks for testing and further development.
The QCB is evaluating digital currency applications that rely on current technical systems to enhance the efficiency of the financial sector. The CBDC will leverage emerging technologies such as artificial intelligence (AI) and distributed ledger technology (DLT).
This move aligns with Qatar’s Third Financial Sector Strategic Plan, issued by the central bank in 2023, and its Fintech Strategy. The Fintech Strategy, included in Qatar National Vision 2030, aims to promote digital banking, insurtech, and other advancements.
Cryptonews spoke to Sheetal R Bhardwaj, a Dubai-based Risk & Compliance professional and a certified crypto investigator, who shared insights on Qatar’s strategic development of CBDC infrastructure.
Question: How does the recent CBDC infrastructure development contribute to Qatar’s National Fintech Strategy goals?
Answer: The development of CBDC infrastructure supports the goals of Qatar’s National Fintech Strategy in several ways. Firstly, it enhances the performance and safety of the payment system by reducing intermediaries, costs, and risks. Secondly, it promotes financial inclusion and access by enabling digital and mobile payments for unbanked or underbanked individuals. Thirdly, it encourages innovation and competition by creating a fair environment for fintech startups and established players, and by stimulating the adoption of new technologies and business models. Lastly, it facilitates international cooperation and integration by ensuring compatibility and interoperability with other CBDCs and payment platforms.
The CBDC infrastructure enables efficient and secure cross-border payments, which contribute to international trade and economic growth. This aligns with the goal of fostering the development of a strong and efficient financial system.
Question: Which banks, both local and international, are involved in testing and developing Qatar’s CBDC for large payment settlements?
Answer: The QCB has invited several banks, both local and international, to participate in the CBDC sandbox and pilot the use of CBDC for large payment settlements. Some of the banks involved are:
– Qatar National Bank (QNB), which has been testing the use of CBDC for cross-border payments and trade finance.
– Commercial Bank of Qatar (CBQ), which has been testing the use of CBDC for domestic payments and remittances.
– Qatar Islamic Bank
– HSBC Qatar, involved in testing the use of CBDC for wholesale transactions and liquidity management.
– Standard Chartered Qatar, for testing the use of CBDC for interbank payments and settlement.
Question: What role do emerging technologies like AI and DLT play in the development of Qatar Central Bank’s CBDC?
Answer: AI can be utilized for various purposes, such as detecting and preventing fraud, as well as analyzing data to improve the efficiency and security of the CBDC system.
DLT, particularly blockchain technology, forms the foundation for secure and transparent transaction recording, ensuring immutability and traceability. It enables the issuance, distribution, and management of the CBDC in a decentralized and tamper-proof manner.
Question: What regulatory changes can be expected as a result of the launch of CBDC infrastructure?
Answer: The introduction of CBDC infrastructure will require revisions and additions to the existing regulatory framework. These changes will address issues such as digital identity verification, data protection, cybersecurity, and anti-money laundering measures.
The goal is to safeguard the reliability, compliance, and security of the CBDC, including the privacy and financial security of its users.