The National Bank of Kazakhstan has joined the global trend of central banks exploring the use of central bank digital currencies (CBDCs), with the initiation of a pilot phase for its own CBDC, called the digital tenge.
Overview of the Pilot Phase
The pilot phase of the CBDC was recently announced by the bank and involves the issuance of the digital tenge on a platform that has been launched in “pilot mode.” The first retail payment using the digital tenge was carried out by an official of the central bank, marking an important milestone in the implementation of the CBDC.
The platform utilizes advanced technology, including automated and blockchain-based smart contracts for settlements, similar to cryptocurrencies. Participating banks have provided digital vouchers and cards to facilitate seamless transfers.
Roadmap for Full Implementation
The National Bank of Kazakhstan has been actively preparing for the implementation of the CBDC since at least 2021. According to the bank’s announcement, the full implementation of the digital tenge is planned to be completed by the end of 2025. The roadmap includes expanding the range of services, exploring various usage scenarios, and increasing the participation of platform stakeholders.
Global Interest in CBDCs
The introduction of CBDCs has gained significant attention globally, with financial institutions advocating for countries to conduct research and establish legislation for national digital currencies. Kristalina Georgieva, the head of the International Monetary Fund (IMF), has expressed the potential of CBDCs to replace cash and provide financial resilience to economies.
Around the world, 130 countries, representing 98% of global GDP, are currently exploring CBDCs, with 19 of the G20 countries in the advanced stage of CBDC development. Eleven countries, including China, The Bahamas, Nigeria, Anguilla, Jamaica, and several Eastern Caribbean countries, have already fully launched a CBDC.
United States’ Approach to CBDC
While many countries are actively pursuing CBDCs, the United States has yet to confirm plans for a national digital currency. However, the country is making progress in the development of a wholesale (bank-to-bank) CBDC. The Federal Reserve (Fed) continues to pilot CBDCs, but the issuance of a CBDC would require support from the executive branch and Congress.
According to analysts from Bank of America, central banks for 67% of countries are exploring CBDCs, representing 98% of global GDP. Among them, 33% are already in advanced stages of development.
Benefits and Skepticism of CBDCs
CBDCs offer potential benefits in terms of more efficient cross-border and domestic payments, financial inclusion, and improved implementation of monetary policy. However, there are also concerns among citizens and investors. A survey conducted by WealthRocket in June found that 39% of 1,500 polled Canadians expressed concerns about losing control of their finances due to CBDCs.
