Saudi Arabia's central bank reports on the digital dirham pilot, and the results are measured

Saudi Arabia's central bank has reported on its digital dirham pilot, and the report's tone is the notable feature: it is measured, specific, and free of the enthusiasm that has characterised CBDC communications elsewhere. The measurement is the credibility, and the report is more useful for it.

The pilot tested the digital dirham in a set of defined use cases — domestic interbank settlement, cross-border transfer, and a small set of retail transactions — and the report sets out what worked, what did not, and what the central bank concluded. The conclusions are cautious: the domestic settlement use case worked technically but did not demonstrate an advantage over the existing rail; the cross-border use case was promising but dependent on counterparties that do not yet exist; and the retail use case worked but did not show demand beyond the pilot's participants.

The reason the measured tone matters is that it preserves the central bank's option to decide on a launch on the merits, rather than on the momentum a pilot generates. A pilot that reports enthusiasm produces a political pressure to launch, because the enthusiasm creates an expectation. A pilot that reports measurement produces no such pressure, because the measurement creates no expectation beyond the evidence. The central bank that reports measurement is the central bank that can decide not to launch, and the ability to decide not to launch is the ability that produces a good launch decision.

The implication is that the Gulf's CBDC work is proceeding at the pace and with the discipline the question requires, and the Saudi report is the evidence. The digital dirham may or may not launch; the decision will be made on the evidence the pilot produced, and the evidence is being reported honestly. That is the way a central bank should approach a question of this magnitude, and the report is the model the region's other central banks should follow.