Central Bank Digital Currencies (CBDCs) have exploded in popularity as of late, with many countries wanting to introduce their own respective CBDC. Some, like The Bahamas, have already launched a CBDC (the Sand Dollar), whereas others continue to work on it. China is said to be leading the pack in terms of development and progress with its digital Yuan, and others such as the likes of Sweden, France, Australia, and Japan continue to pursue their own CBDC efforts. Now, Kazakhstan is the latest to join in on the CBDC trend.
It should be mentioned, though, that while Kazakhstan is interested in the possibility of implementing a CBDC, the country’s central bank has nonetheless stated that there is no intention for such a CBDC to replace cash or cashless-based payments in the country.
Public consultation
The NBRK (National Bank of Kazakhstan) had published a report recently which outlined the opening of a public consultation and pilot project for state-backed CBDC. As per the report, the digital tenge (the national currency of Kazakhstan) will be issued by the National Bank itself in an effort to allow for the continued development and progress of the country’s national payment system as well as to hopefully decrease the dependency on cash settlement utilizing particular technical-based features.
The NBRK once again highlighted the fact that while a CBDC would be beneficial for the country, it is not meant to replace cash or cashless-based payments as instead, it would be used as a viable alternative. This alternative would then be working alongside the pre-existing solutions, not against them, the NBRK added.
Still, the NBRK did also acknowledge that a digital tenge could help in ushering in an increased competitive nature within the various payment markets and can also assist in bolstering the financial system’s stability and integrity. Furthermore, it can also do its part in improving the public’s trust as far as payments backed by the state are concerned. Lastly, the NBRK shall be paying close attention to ensuring the privacy of the numerous digital tenge consumers, as well as increasing consumer protection in general.
Pros and cons to be evaluated first
Understandably, the NBRK would want to conduct a thorough assessment of the various pros and cons associated with the implementation of a possible CBDC in Kazakhstan before actually launching it. To this end, it would ideally want to define the CBDC’s goals, the methods to be utilized for distribution as well as issuance, what applied technology shall be employed, its impact on financial and economic stability, and its potential effect on monetary policy.
Whatever the case may be, the country remains hopeful towards establishing its own CBDC, as it had originally begun considering it in July of last year. It also can be used to fight against corruption, according to local government officials.