Kazakhstan has launched public consultations on the issue of the digital currency of the central bank (CBDC). As added, the new currency is not intended to replace cash or non-cash payments. The country’s central bank only plans to explore the potential benefits and risks of this type of economic model.
Kazakhstan and CBDC
The National Bank of Kazakhstan (NBRK) published on Wednesday report on the pilot digital tenge project and thus launched a public consultation on a potential central bank digital currency.
According to the report, digital tenge would be a new form of money issued by NBRK, enabling “Further development of the domestic payment system and reduction of dependence on cash settlements with the use of unique technical features”. The bank emphasized that CBDC is not intended to replace cash or non-cash payments, but would rather be an alternative used in parallel with existing payment solutions.
NBRK noted that digital tenge will improve competition in the payments market, strengthen the stability of the financial system, and contribute to increasing public confidence in state-supported payments. “The technology will meet the highest cybersecurity standards. […] The bank will pay special attention to consumer protection and the privacy of digital tenge users “- reported by NBRK.
The bank will first conduct a comprehensive study of the benefits and risks of a potential CBDC. In collaboration with financial market players and global partners, NBRK also plans to define digital tenge goals, emission and distribution methods, technology used, and potential impact on monetary policy, financial stability and the payment ecosystem.
The Kazakh authorities initially announced that the government began considering the issue of the national digital currency in July 2020, along with plans to increase investments in cryptocurrency mining. Local officials then highlighted the potential of digital tenge to become a key tool in the fight against corruption in Kazakhstan.
CBDC in the world
The first CBDC to be linked to a large economy is likely to be built in China. It is about the digital yuan that may hit the market later this year.
The US authorities are also debating the idea of currency digitization, which we wrote about here.
The European Union also focuses on the topic of the digital euro, which may be created in about 5 years.