The Central Bank of Kazakhstan is planning to develop a national digital currency, known as CBDC. In the short term, it will be a private blockchain. Therefore, one of the private financial companies will become a token issuer, and the others will be token users. Currency or money is one of the oldest areas of economic activity. It should be noted that in the modern economy, the currency functions are implemented by a unified monetary system and a single monetary instrument. The monetary system of Kazakhstan has a rigid structure and is based on the national currency – tenge. To ensure stability in the national economy, it is worthwhile to consider the possibility of creating an analogue of the national currency in the digital form, based on the distributed registry technology.
Central bank digital currencies (CBDCs) continue to be seriously discussed by governments around the world, and Kazakhstan is the latest country to announce its plans. The National Bank of Kazakhstan is preparing to launch a pilot CBDC program in the near future.
The National Bank has published a document for public consultation
According to an announcement on its website, the bank plans to test its prototype digital tenge in the first phase with private companies in the financial sector.
Participants will adopt the CBDC to provide payment services through a two-tier architecture on which the digital currency will be built.
At the same time, with a view to the proper official launch of the Kazakh digital tenge, the National Bank plans to conduct a comprehensive study of the benefits and risks with an identification of the tasks solved by the digital currency, the method of issuance and distribution, the technology used, the impact on monetary policy, financial stability and the payment system.
At the same time, the Bank published a 34-page public discussion paper to gather feedback from residents and assess the potential impact of a virtual asset on the domestic economy.
However, the National Bank of Kazakhstan has not announced an approximate timetable for the start of the pilot project, nor a timetable for its completion, which means that it may depend on the dynamics of CBDC performance among participants.
Kazakhstan’s position on crypto-currencies
The country has shown some interest in the cryptocurrency industry despite its initial tough stance in 2018, even suggesting a possible ban on trading and mining digital assets.
To alleviate the economic crisis caused by the Coronavirus, the Ministry of Economy has proposed a 15% tax on the mining of virtual currency in August 2020.
In addition, in September 2020, Bagdat Musin, Kazakhstan’s Minister of Digital Development, unveiled the government’s plans to reach its goal of $714 million in crypto investments over the next three years.
What do you think about the announcement of the start of the CBDC pilot project in Kazakhstan? Let us know your comments in the section below.
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