Kazakhstan’s central bank assesses achievements of digital tenge pilot program and outlines future plans.

The digital tenge, the central bank digital currency (CBDC) of Kazakhstan, has been recognized as a success following a month-long pilot initiative. A range of business, regulatory, and technical enhancements are planned for it in 2024.

Throughout its pilot phase, the digital tenge facilitated the provision of complimentary lunches for schoolchildren in Almaty via the local Onay! card, which was initially intended for the transit system. The Kazpost postal service acted as the intermediary for these transactions.

Plastic cards were distributed to focus group participants by four local banks in collaboration with Visa and Mastercard. These cards enabled users to make purchases both in-person and online, as well as to withdraw cash from ATMs. Merchants had the choice to accept digital tenge or convert them into “non-cash” tenge.

A digital tenge card. Source: Islam Yerzhan, LinkedIn

By converting digital tenge, they were incorporated into existing point-of-sale and QR systems. The cards were operational both within and outside of Kazakhstan. The report indicated that this degree of interoperability was unprecedented for a CBDC.

Additional trials with the digital tenge included executing cross-border payments through SWIFT and the issuance of CBDC-backed stablecoins on Binance and KASE platforms. The digital tenge was also utilized for gold tokenization, value-added tax was collected via a smart contract, and a move-to-earn application was tested.

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The National Bank of Kazakhstan and the National Payment Corporation of Kazakhstan (NPCK), an entity established in September to oversee the national CBDC, have an extensive agenda for 2024. Their objectives include expanding the number of intermediary banks and further advancing decentralized finance applications.

The agencies aim to implement offline transactions on a large scale, which would significantly enhance financial inclusion in the country, given that internet access is limited in certain areas. They also plan to boost involvement in cross-border payment initiatives. Kazakhstan is an observer in Project mBridge. Additionally, they have regulatory and legislative objectives that must be pursued concurrently, with aspirations to enhance the security and processing speed of the digital tenge.

NPCK CEO Binur Zhalenov assured in an interview broadcast prior to the report’s release that the digital tenge would not be utilized for user surveillance.

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