Bahrain CBDC Tracker

Bahrain is currently in the research phase.

CBDC History and Development

In 2020, JP Morgan and Bank ABC conducted a pilot study to test cross-border payment solutions. While this project is not technically a CBDC project, it is important to note that the Central Bank of Bahrain said it “will act as a close partner in the pilot between Bank ABC and J.P. Morgan and going forward would look to extend the collaboration to Central Bank Digital Currencies (CBDCs).”

In 2021, Central Bank of Bahrain director Yasmeen Al-Sharaf contributed to “the preparation and review of two whitepapers published by WEF as a part of a series of whitepapers composed of eight parts, exploring a number of critical topics relating to Central Bank Digital Currencies (“CBDC’s”) and stablecoins.”

In 2023, the International Monetary Fund reported that interest in CBDCs has been growing in Bahrain and that the “authorities have been looking into the general benefits and risks from the introduction of a CBDC in the literature as well as other country experiences.”

In 2024, Central Bank of Bahrain governor Khaled Humaidan was asked how to convince people to trust a CBDC. Governor Humaidan responded that there would be little resistance because people already make digital payments. Her further claimed that central banks just need to build CBDCs and people will come. Finally, governor Humaidan said, “We’re probably going to stop calling it central bank digital currency. It’s going to be a digital form of the cash, and at some point in time hopefully we will be able to be one hundred percent digital”

Human Rights and Civil Liberties Concerns

Bahrain received a 12 out of 100 in Freedom House’s 2023 Freedom in the World report. Issues plague nearly all categories in the report. However, when considering the risks associated with the issuance and use of a CBDC, there were two concerns that stood out. The concerns were the unlawful surveillance of citizens and the restrictions on associations. Both issues could be worsened by a CBDC.

“International human rights organizations and media outlets reported that the government used the NSO Group’s Pegasus spyware to unlawfully intercept and read communications of activists, bloggers, journalists, members of dissolved political societies, and human rights activists,” according to the U.S. Department of State. Yet, surveillance didn’t stop there. “Although the constitution prohibits such actions, the government reportedly violated prohibitions against interference with privacy, family, home, or correspondence.” Unfortunately, a CBDC could be used to greatly expand surveillance by putting financial records on government databases by default.

Freedom of association is severely restricted in Bahrain. The U.S. Department of State reported that “The law allows the government to dissolve and ban political societies” and that the “government decides whether a group is social or political in nature, based on the group’s proposed bylaws.” Freedom House further reported that “Many Bahrainis have been convicted and jailed for political speech, including on social media.” A CBDC could be used as another tool in this effort. Across the world, governments have often turned to freezing and seizing the money of activists, political rivals, and protestors to undermine the opposition. A CBDC would make such initiatives easier by allowing governments to take direct control of each citizen’s finances.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.

For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.