Following a successful month-long pilot project, Kazakhstan's Central Bank Digital Currency (CBDC), the Digital Tenge, has been deemed effective, marked by various enhancements across business, regulatory, and technological aspects by 2024.
The pilot phase witnessed the utilization of the digital Tenge to provide complimentary meals to school children in Almaty via the local Onayka system, initially designed for transportation purposes. Facilitating these transactions, the Kazakhstan Post Postal System Operator served as an intermediary.
Collaborating with Visa and Mastercard, four local banks issued plastic cards to members of focus groups. These cards allow users to conduct in-person or online transactions and withdraw cash from ATMs. Merchants participating in this initiative have the option to accept the digital Tenge or convert it into a "cashless" Tenge, seamlessly integrating it into existing point-of-sale and QR code systems. Notably, these cards have usability both within and outside Kazakhstan, marking a significant interoperability milestone for a CBDC.
Further experiments involving the digital Tenge included cross-border payments via SWIFT, issuance of CBDC-backed stablecoins on Binance and KASE platforms, tokenization of gold using the digital Tenge, VAT collection via smart contracts, and trials of mobile earning apps. With ambitious goals set for 2024 by the National Bank of Kazakhstan and the National Payments Company of Kazakhstan (NPCK), the country's CBDC management agency, initiatives aim to expand intermediary bank numbers and advance decentralized finance applications. They aspire to enable widespread offline transactions to enhance financial inclusion, particularly in regions with limited internet connectivity, while also increasing involvement in cross-border payment ventures. Additionally, Kazakhstan is observing the mBridge project and concurrently working on regulatory, legislative, security, and processing speed improvements for the digital Tenge, with NPCK CEO Binur Zhalenov reassuring users about privacy concerns in an interview ahead of the report's release.
