Kazakhstan opens public consultation for central bank digital currency

The central bank of Kazakhstan is planning to examine the potential benefits and risks of adopting a state-backed digital currency.

Kazakhstan opens public consultation for central bank digital currency

The National Bank of Kazakhstan (NBRK) published a report this Wednesday on a digital tenge pilot project and opened a public consultation on the central bank digital currency (CBDC).

As per the NBRK report, the digital tenge would be a new form of money issued by the NBRK to enable the “further development of the national payment system and reduce reliance on cash settlement using unique technical features.” 

The bank, however, highlighted that the CBDC is not intended to replace fiat or cashless payments, but would rather be used in parallel with existing payment solutions.

NBRK further stated that the digital tenge would improve competitiveness in the payment market, strengthen the stability of the financial system, as well as contribute to increasing public trust in state-backed payments. 

“The technology will meet the highest cybersecurity standards,” the NBRK noted

“The bank will pay special attention to consumer protection and the privacy of digital tenge users.” 

The bank will first examine the benefits and risks related to a potential Central Bank Digital Currency. In partnership with financial market players and global partners, It also planning to define the digital tenge's objectives, issuance and distribution methods, applied technology and the potential impact on monetary policy, financial stability, and the payment ecosystem.

Kazakhstan authorities announced that the government began considering a national digital currency back in July 2020 alongside planning to increase investment in cryptocurrency mining. Local officials subsequently pointed out the digital tenge’s potential to become a crucial tool in fighting corruption in Kazakhstan.