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Thursday, February 2, 2023

Qatar evaluating digital banks and central bank digital currencies

Qatar’s Central Bank (QCB) is investigating the possibility of launching a digital currency and issuing digital bank licenses.

Alanood Abdullah Al Muftah, head of the fintech section at the QCB, says that the bank will soon announce its future focus on a range of fintech verticals.

QCB will also determine whether a central bank digital currency (CBDC) can be established in Qatar, Al Muftah said. She explained:

“Each central bank should study digital banks, considering their growing significance in the global market. We also see the direction of the market moving towards having a digital currency. However, it’s still being studied whether we’re having a digital currency or not.”

Qatar’s regulatory sandbox, Al Muftah said, is currently being tested by three firms in the payments sector. She also stated that the QCB is considering other firms interested in utilizing the regulatory sandbox.

A regulatory sandbox is a space in which fintech firms can test new products, services, business models, and delivery mechanisms in a real-world setting while benefiting from an accelerated authorization process and supervisory monitoring.

Private Qatari bank Dukhan Bank, meanwhile, is examining the possibility of creating a digital bank in Qatar, its chief operations and digital officer Narayanan Srinivasan told The Peninsula. However, Srinivasan warned that his institution would only build a digital bank after a better understanding of its economics. As per the report, Dukhan Bank is also considering blockchain technology in the payments sector.

Despite private virtual currencies like Bitcoin (BTC) gaining popularity and users, government-backed CBDCs, often viewed as an antithesis to private cryptocurrencies, have been accelerating rapidly. According to the Atlantic Council, 87 nations are currently developing their own digital currencies, with only 14 having completed the pilot phase as of June 2019. Nine countries have already implemented CBDCs.

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