Kazakhstan’s Digital Tenge: Victory for the Pilots, Gears for Improvement in 2024
Digital Tenge, representing Kazakhstan’s pioneering venture into central bank digital currency (CBDC), has completed a month-long pilot project. This groundbreaking effort to digitize the national currency is an important milestone, bringing significant changes to Kazakhstan’s financial technology system landscape. The achievements of this project serve as a guide for possible future development of applications using digital currencies.
The pilot program served as a testing ground for various applications of the Digital Tenge. Originally developed to pay for public transport systems, the local Onai Card has been used for a variety of purposes, including providing free meals to children in Almaty as well as more complex financial activities. One of the most important roles that the Kazpost postal system played in these transactions was that of an intermediary. Additionally, four domestic banks collaborated with global payment giants Visa and Mastercard to produce plastic cards. The card allowed customers to make purchases both online and offline as well as withdraw cash from ATMs. This feature demonstrated the digital currency’s ability to be used in a variety of situations beyond Kazakhstan’s borders.
Additional tests for the digital tenge include its use in international payments via SWIFT and the issuance of CBDC-backed stablecoins on platforms such as Binance and KASE. Additional experiments on digital tenge were also conducted. The pilot also explored the areas of gold tokenization and the use of smart contracts for tax collection. Additionally, revenue-generating applications were also launched. The Digital Tenge has a wide range of applications, demonstrating its adaptability and potential to revolutionize Kazakhstan’s financial landscape.
The National Bank of Kazakhstan and the National Payment Corporation of Kazakhstan (NPCK) are looking to the future and setting ambitious goals for 2024. The rate of offline transactions will be a key focus of efforts to promote financial inclusion, especially in regions with low internet availability. Additionally, participation in initiatives related to international payment systems will be a top priority. It will also highlight improvements in processing speed and security of the Digital Tenge to meet regulatory and legislative goals. These improvements are expected to further integrate the Digital Tenge into the global financial system and strengthen its functionality.
Amid these technological advancements, NPCK Chief Executive Officer Binur Zhalenov confirmed that the Digital Tenge will not be used for user monitoring purposes, allaying privacy concerns. From this statement, it is clear that Kazakhstan is committed to ensuring that its digital currency efforts continue to maintain user trust and safety.
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