National Bank of Kazakhstan introduces digital currency
Kazakhstan has become the latest country to launch a digital version of its national currency, the tenge, in a bid to modernize its payment system and reduce corruption.
The digital tenge, or DT, is a central bank digital currency (CBDC) issued and controlled by the National Bank of Kazakhstan, the country’s central bank. Unlike cryptocurrencies, which operate on decentralized and open networks, the DT is backed by the tenge and runs on a closed and secure platform.
The National Bank announced the launch of the DT on November 21, after two years of testing and development. According to the bank, the DT is “a new payment tool that meets the realities and challenges of the digital innovative economy”.
One of the main advantages of the DT is that it allows for greater transparency and accountability in government spending, as the money can be tagged and tracked for specific purposes. For example, the bank said that the DT could be used to ensure public and government control over budget spending, as the money would disappear from the system once the expenditure has taken place.
The bank also claimed that the DT would enhance the privacy and security of users, as the government would not monitor the movement of personal money of the public. Users would also be able to set their own rules and limits for using the DT, such as restricting the purchase of certain goods or services.
Another feature of the DT is that it can be used offline, which is especially useful in remote areas where internet or mobile connectivity is limited or unavailable. The bank said that the DT could be accessed through biometric data, such as fingerprints, similar to the digital yuan, the CBDC of China, which served as a model for the DT.
The DT is currently in its pilot phase, and the bank plans to expand its functionality and scope in the coming years. By 2024, the bank aims to enable offline payments with the DT, and by 2025, it hopes to facilitate cross-border transactions with the DT.
The bank has also launched a collaborative platform called the Digital Tenge Hub, which brings together financial market participants, experts, government agencies, and international partners to study the issues and opportunities of implementing a national digital currency in Kazakhstan.
The bank said that it would continue to assess the benefits and costs of the DT, and that it would develop a decision-making framework on the need and feasibility of creating a national digital currency in Kazakhstan.
Kazakhstan is not the only country that is exploring the potential of CBDCs. According to a recent report by the Bank for International Settlements, 86% of the world’s central banks are actively researching CBDCs, 60% are experimenting with them, and 14% are deploying pilot projects.
Some of the countries that have already launched or are planning to launch CBDCs include China, the Bahamas, Sweden, Japan, South Korea, and the European Union. The United States, however, has been more cautious and has not committed to issuing a digital dollar anytime soon.
