Role of Central Bank Digital Currency (CBDC) for Financial Inclusion in Organization of Islamic Cooperation (OIC) Countries

The best solution to the problem of financial inclusion that exists in the OIC countries can be found in the correct design and implementation of CBDC. A CBDC is more than simply a software program. it is a complex digital structure with the ability to have both positive and negative economic effects. OIC countries will need extensive knowledge and a thorough understanding of the design difficulties that this fundamentally new kind of currency in this situation raises in order to establish a safe, effective, and accessible CBDC.In order to complete years of preliminary research and then pilot initiatives, OIC finance sector regulators will need to redirect limited resources from other immediate issues. As Nigeria has already pilot launched e-Naira in 2021 and countries like UAE, Lebanon, Palestine and Iran are exploring issuing retail CBDC. The OIC council, Islamic Development Bank (IDB) Group and Arab Monetary Fund should coordinate with the central banks of the member countries in creating a road map design to launch CBDC based on the financial inclusion key indicator, technical expertise and the required digital infrastructure the member country poses. The CBDC issuance can be done in three phases. In first phase, those countries should issue CBDC which has completed the necessary research and expertise and developed all the required digital infrastructure. The second phase should be the countries that are already in research and development of CBDC and have the necessary digital infrastructure. The third phase is for the least developed country that have started research and expertise in CBDC and laying down the required digital infrastructure. The central banks should design the CBDC keeping the future opportunities and challenges from the very beginning of the design. It is concluded that it is now necessary to start setting the framework for this potentially revolutionary breakthrough by developing specialized knowledge and skills among the central banks of the region.