Saudi Riyal Goes Digital: Inside SAMA’s “Oil-Backed” CBDC Pilot

Riyadh likes to move quietly. When the Saudi Central Bank—still known locally as SAMA—confirmed in January 2023 that it was “continuing to experiment” with a wholesale central-bank digital currency (CBDC) alongside domestic banks and fintechs, the press release ran barely 300 words and never used the term “digital riyal.” Yet for payments insiders, the message was loud: the Gulf’s largest economy had kicked off a serious pilot to test real-time, token-based settlements inside the kingdom’s financial plumbing.

From Proof-of-Concept to a Cross-Border Leap

Phase-one prototypes have so far stayed on closed testnets, limited to high-value transfers between a handful of commercial banks, according to people familiar with the sandbox. But the scope widened dramatically last June when SAMA became a full participant in Project mBridge—the Bank for International Settlements–led multi-CBDC platform that already includes China, Hong Kong, Thailand and the UAE. Within days, the BIS declared mBridge had reached “minimum viable product” status, paving the way for live wholesale transactions across at least five currencies. “The most advanced cross-border CBDC project just added a major G-20 economy and the largest oil exporter in the world,” noted Josh Lipsky of the Atlantic Council.

Why Analysts Call It “Oil-Backed”

Neither SAMA nor the BIS has promised that the digital riyal will be formally collateralised by barrels of crude. Still, the label sticks because of what mBridge could enable: settling Saudi oil sales to China in digital yuan and digital riyals without touching U.S. correspondent banks. One commentary bluntly billed the development “the birth of the petroyuan,” predicting a gradual shift of crude invoicing off the dollar rails. Reuters went further, saying the move could be “another step towards less of the world’s oil trade being done in U.S. dollars.” In other words, the project may be oil-linked by function, if not by formal collateral.

Domestic Stakes: Vision 2030 Meets Fintech Plumbing

Saudi officials stress more prosaic goals. The pilot is framed as part of Vision 2030’s push to modernise payment infrastructure, deepen capital markets and entice foreign investors. SAMA says it wants to understand “policy, legal and regulatory considerations” before any launch decision. CBDCs also dovetail with the region’s quest for cheaper, faster remittances and wholesale funding. An IMF study last year singled out Gulf oil exporters—including Saudi Arabia—for whom cross-border frictions are a “priority problem that CBDCs could slash.”

Geopolitics: Hedging the Petrodollar—Carefully

The kingdom’s digital-currency play slots into a broader Gulf realignment. Carnegie Middle East researchers note that GCC states are “opening up to digital finance” partly to “recalibrate geopolitical alliances” and reduce reliance on Western clearing systems.  By joining mBridge, Saudi Arabia sits on the same ledger as the People’s Bank of China—its largest oil customer—and as the UAE, its key regional partner in Project Aber, the earlier bilateral CBDC proof-of-concept.

Friction Points Ahead

For all the excitement, risks abound. A CBDC that bypasses commercial-bank deposits could squeeze local liquidity if design features—such as balance caps or tiered remuneration—are not calibrated carefully, the IMF warns. Saudi regulators also maintain an official ban on retail crypto trading by financial institutions, even as grassroots adoption climbs. That means the digital riyal must walk a fine line: proving it can deliver real-time settlement efficiency without opening the floodgates to the speculative crypto market regulators still distrust.

What Happens Next

SAMA has given no launch date, but officials privately describe a three-step roadmap:

1. Domestic wholesale pilots (underway) to validate throughput, privacy and sharia-compliance controls.
2. Cross-border oil-trade tests on mBridge, restricted to state-owned Aramco invoices and a small circle of settlement banks.
3. Policy decision—likely post-2026, after a full cost-benefit review and a public consultation on data-privacy safeguards.
   

Whether the kingdom’s CBDC ultimately carries an explicit oil peg is almost beside the point. If early pilots prove that barrels and bytes can settle simultaneously, Riyadh will have built a payments rail that—by design—draws its strength from the same resource base that anchors the physical riyal. In that sense, the “oil-backed” moniker may turn out to be less hype than shorthand for a simple geopolitical calculus: in a world of programmable money, the heft of your ledger still comes down to what’s beneath the sand.

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