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- Kazakhstan announced that it recorded success during its month-long CBDC pilot test.
- Kazakhstan makes plans for 2024.
Kazakhstan’s central bank digital currency (CBDC), the digital tenge, has achieved success following a month-long pilot project.
Various business, regulatory, and technical enhancements are on the horizon for the digital currency in 2024.
During the pilot phase, the digital tenge demonstrated its utility by facilitating transactions such as providing schoolchildren in Almaty with free lunches through the local Onay card, originally designed for transit purposes.
The Kazpost postal system operator played a crucial role as an intermediary in these transactions.
Plastic cards, issued by four local banks in collaboration with Visa and Mastercard, were distributed to members of focus groups.
These cards enabled users to make both in-person and online purchases, as well as withdraw cash from ATMs. Merchants had the flexibility to accept digital tenge directly or convert them to “non-cash” tenge.
The integration of digital tenge into existing point-of-sale and QR systems, both within and outside Kazakhstan, showcased a remarkable level of interoperability, a noteworthy achievement for a CBDC.
Additional experiments with the digital tenge included cross-border payments via SWIFT, the issuance of CBDC-backed stablecoins on Binance and KASE platforms, tokenizing gold, collecting value-added tax using smart contracts, and trialing a move-to-earn app.
Looking ahead to 2024, the National Bank of Kazakhstan and the National Payment Corporation of Kazakhstan (NPCK), established in September to administer the national CBDC, have outlined ambitious goals.
See Also: Republic Of Palau Highly Satisfied With Ripple-based CBDC Pilot
These include expanding the number of intermediary banks, further developing decentralized finance applications, and facilitating offline transactions at scale. The latter goal is particularly significant for enhancing financial inclusion in regions with limited internet connectivity.
The agencies also aim to increase participation in cross-border payment projects, with Kazakhstan as an observer in Project mBridge.
Simultaneously, regulatory and legislative objectives will be pursued, alongside efforts to enhance digital tenge security and processing speed.
NPCK CEO Binur Zhalenov emphasized in an interview that the digital tenge would prioritize user privacy and not be utilized for surveillance purposes. The success of the digital tenge pilot project underscores its potential to revolutionize various aspects of the economy.
The Digital Tenge And Plans For 2024
As a means of facilitating everyday transactions, from school lunches to cross-border payments, the digital tenge has proven its versatility.
The collaboration with payment giants Visa and Mastercard, coupled with interoperability achievements, positions the digital tenge as a trailblazer among CBDCs.
One notable aspect of the pilot project was the issuance of plastic cards to focus group members, enabling them to seamlessly integrate digital tenge into their daily lives.
The option for merchants to accept digital tenge directly or convert them to conventional currency demonstrates a flexibility that accommodates various preferences within the economy.
The upcoming developments in 2024 signal a commitment to further refining and expanding the digital tenge ecosystem.
The focus on increasing the number of intermediary banks speaks to the ambition of creating a widespread and accessible digital currency infrastructure.
Simultaneously, the emphasis on decentralized finance applications aligns with global trends in exploring innovative financial solutions.
Offline transactions at scale represent a pivotal goal for promoting financial inclusion, especially in regions with limited internet access.
By addressing this challenge, Kazakhstan aims to ensure that a broader segment of its population can benefit from the advantages of digital currency.
See Also: Standard Chartered Joins China’s CBDC Pilot Testing
Participation in cross-border payment projects, such as Project mBridge, positions Kazakhstan as an active player in the evolving landscape of international transactions.
The regulatory and legislative objectives underscore the importance of creating a robust framework that balances innovation with necessary safeguards.
The commitment to enhancing digital tenge security and processing speed reflects an understanding of the evolving nature of digital finance. By prioritizing these aspects, Kazakhstan aims to build trust in the digital currency and encourage its widespread adoption.
Kazakhstan’s digital tenge has emerged from its pilot phase with notable successes and a clear roadmap for the future.
As the country prepares for further advancements in 2024, the digital tenge stands as a promising example of how central bank digital currencies can contribute to a more efficient, inclusive, and secure financial ecosystem.
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