Improving Cooperation among Central Banks in terms of Digital Currencies: Challenges and Prospects for OIC Member Countries

As digitalization in financial services has gained a significant momentum in the aftermath of 2008 great financial crisis, several attempts are made to improve efficiency through lower transaction costs as well as granting secure and reliable infrastructure for introduction of new means of payment and even digital form of currencies. Several digital coins have been introduced since then as the central banks across the world struggled to cope with this new transformant process. Development of the central bank digital currencies (CBDCs), a virtual money backed and issued by a central bank, increased its pace and several countries issued theirs one by one. Along with a few advanced countries and international institutions such as the Bank for International Settlements (BIS), emerging markets such as China, Russia and Nigeria have become pioneers in the field. According to Atlantic Council’s CBDC tracker, there are now 130 countries corresponding to 98% of the world’s GDP that explore the CBDCs. Among the G20 countries, 19 of them are already engaged in developing and some even adopting digital currencies. So far, 11 countries have launched a digital currency while there are 12 ongoing cross-border wholesale CBDC projects. Among such initiatives, organization of Islamic Cooperation (OIC) countries lack a cross-border project -other than United Arab Emirates (UAE) and Saudi Arabia’s Project Aber and this study explores the chances of joint efforts among OIC countries. Also highlighted in the report are the individual country cases’ strengths and weaknesses so that lessons to be derived for other OIC member countries at large.