DUBAI, UAE — The Middle East and North Africa (MENA) region is emerging as a hotspot for cryptocurrency enthusiasm, according to a recent global survey on Central Bank Digital Currencies (CBDC) by the CFA Institute. The study reveals a distinct contrast between the MENA region and the rest of the world in terms of trust, knowledge, and readiness to embrace digital currencies.
The survey found that only 42 percent of respondents globally believe that central banks should introduce CBDCs, with a mere 13 percent feeling very knowledgeable about them. However, the MENA region paints a different picture. Nearly two-thirds of respondents (63 percent) from the area believe that central banks should introduce CBDCs, and almost three-quarters (73 percent) would utilize a CBDC if provided by a central bank.
This favorable sentiment is likely influenced by recent developments such as the UAE Central Bank’s announcement of “The Digital Dirham” project, a digital currency issued and guaranteed by the central bank.
Efficiency, convenience, and security
For MENA residents, the appeal of CBDCs lies in their potential to speed up payments and transfers, providing efficiency, convenience, and security for both personal and professional transactions. While concerns about cybersecurity, fraud, data privacy, and lack of use cases exist, the overall outlook in the region is positive.
More than half of the respondents believe that CBDCs will improve overall financial stability and enhance financial inclusion for economically underserved sectors or communities. This perspective is more optimistic than the average global view.
Interestingly, almost half of the MENA respondents believe that CBDCs and cryptocurrencies can coexist. This view acknowledges the value that both digital assets and government-backed digital currencies can have in fostering a thriving digital economy.
The region’s approach
The Gulf Cooperation Council (GCC) countries have taken varied approaches to cryptocurrency regulation. While Kuwait has issued advisories warning against cryptocurrency investments, the UAE has positioned itself as a regional hub for blockchain innovation. The establishment of the DMCC Crypto Centre in Dubai in 2021 further underscores the UAE’s progressive stance.
Other GCC countries are also exploring and regulating cryptocurrency. Saudi Arabia’s Monetary Authority is utilizing Ripple’s blockchain technology, and the Central Bank of Bahrain has created a framework to oversee cryptocurrency activity.
Antoine Shehadeh, Senior Director, MENA at CFA Institute, emphasizes the need for central banks to engage more with the public and market participants on the potential benefits of CBDCs. He notes that there is still much work to be done to ensure successful implementation and widespread adoption, particularly in emerging markets like MENA.
The MENA region’s strong interest in and support for digital currencies, both cryptocurrencies and CBDCs, sets it apart from the global trend. With initiatives like the Digital Dirham and a generally positive outlook on the future of digital currency, the region is poised to be at the forefront of the digital currency revolution.
However, the path to success requires careful navigation of regulatory landscapes, public engagement, and a clear understanding of the potential risks and rewards.
The MENA region’s unique blend of enthusiasm and caution provides valuable insights for other regions considering the adoption of digital currencies. It also highlights the importance of tailored strategies that consider regional preferences and concerns, ensuring that the promise of digital currency can be realized in a way that benefits all.