Doha: The Qatar Central Bank (QCB) is in the early stages of creating a central bank digital currency (CBDC). This comes as many governments around the world look into launching their own CBDCs in the midst of a rapid digital revolution in the financial industry.
QCB Governor H.E. Sheikh Bandar bin Mohammed bin Saoud Al Thani said yesterday at the Qatar Economic Forum, Powered by Bloomberg, that the central bank is working to find the right technology and platform to issue Qatar’s CBDC. CBDC is a virtual money created by a central bank that is also considered a digital form of a country’s flat currency.
“Many central banks are thinking about issuing CBDC right now, and so are we.” We are still in the beginning stages, though. The QCB Governor said, “We are weighing the pros and cons of giving out CBDC and looking for the best technology and platform to do so.”
The Governor said of crypto technology, “At the moment, crypto are a technical innovation.” It could be the start of a new era of fast, cheap, and easy-to-find financial services. But crypto assets that aren’t backed by central banks might not be as reliable.”
During the interview, the QCB Governor said that Qatar’s monetary and exchange rate policies will stay the same. He also pointed out that the central bank’s portfolio is diverse, which makes it more flexible during global crises.
When asked if the central bank planned to switch to a more flexible peg, the Governor said, “Our monetary and exchange rate strategy is working well for our economy.” In a recent study, the IMF also said that exchange rates in the GCC remain stable. There will be no changes to our policy on exchange rates. The Qatar Stock Exchange is also getting a lot of money. And this proves that our policy works well.”
With the FIFA World Cup Qatar 2022 coming up, the Governor said that the central bank has the power to control inflation.
“We have a different economic situation. We have been investing in our infrastructure for the last 10 years for the preparation for the World Cup. We have economic activities different than the rest of the GCC countries. We are going to host a major event this year. And this event will boost the activities in Qatar. It is normal that we have a little bit higher interest rate. Our aim is to contain the inflation in Qatar, and we have the tools to do so,” he said.
The Governor emphasized that the QCB’s portfolio is well-diversified, with investments in Europe, the United States, and the Far East. “There are different currencies in our portfolio, and this has always been our strategy, to diversify and not to depend on one currency before all of these global incidents (war in Ukraine) happened. And we will continue to do so. We are very confident about our portfolio,” he said, and they will keep doing that.
In a forecast of the financial market, the Governor said that there would be stagflation this year and a recession in 2023.
“We have increased the interest rates twice this year, in total of 1.5 percent. We have inflation of 5.18 percent in Qatar. The effectiveness of our monetary and exchange rate policy is benefiting us. We have witnessed an inflow of capital recently, which approved our monetary and exchange rate policy. We act to contain the inflation in Qatar. And we believe that we are aligned with US as well. So we expect that to increase interest rate you contain inflation”.