The National Bank of the Republic of Kazakhstan (NBK) has taken significant steps toward the development and implementation of its central bank digital currency (CBDC), known as the digital tenge. In an official statement released on September 15th, the NBK announced the establishment of a new entity called the National Payment Corporation (NPC), which will play a pivotal role in this ambitious initiative. The NPC will be built upon the foundation of the former Kazakh Center for Interbank Payments and will assume responsibility for overseeing various aspects of the national payment system.
The NPC will oversee all CBDC activities
This includes interbank clearing services, money transfers, and digital identification. Additionally, the NPC will take on a critical role in shaping the “digital financial infrastructure” required for the digital tenge’s successful implementation. The journey towards the digital tenge began in February 2023, with a set deadline for full-scale implementation by 2025. Berik Sholpankupov, the deputy governor of the NBK, previously outlined the central bank’s vision for this project. He emphasized a vision of collaboration between traditional finance and decentralized finance (DeFi), to enhance financial inclusion and support international trade.
Currently, the CBDC pilot program in Kazakhstan is in progress, with real consumers and merchants participating within a controlled environment. Notably, one of the key partners in this endeavor is Binance, the world’s largest cryptocurrency exchange. Binance is actively supporting the pilot through its technical solution, the BNB chain. This collaboration with Binance is a significant development in Kazakhstan’s blockchain and digital asset ecosystem. In June, Binance made headlines by announcing the launch of a regulated digital asset platform in Kazakhstan, established in partnership with Freedom Finance Bank, a local financial institution.
This platform allows users to seamlessly transfer fiat funds to their accounts on the Binance platform, bridging the gap between traditional finance and the rapidly evolving world of cryptocurrencies. The establishment of the NPC marks a strategic move by the NBK to centralize and streamline efforts related to the digital tenge. By merging the functions of the former Kazakh Center for Interbank Payments with new responsibilities in overseeing the national payment system and digital infrastructure, the NPC aims to create a robust foundation for the digital tenge’s success.
Crypto and the future of financial inclusion in Kazakhstan
One of the primary objectives of the digital tenge project is to foster collaboration between conventional financial systems and the world of DeFi. This synergy has the potential to bring about a more inclusive financial landscape, where a broader range of individuals and businesses can access financial services and participate in international trade. The digital tenge is envisioned as a digital representation of the national currency, designed to operate seamlessly in the digital realm.
This would enable faster and more cost-effective cross-border transactions, potentially revolutionizing international trade for Kazakhstan. The current pilot phase of the CBDC project is a crucial step in testing the technology, infrastructure, and user experience. Real consumers and merchants participating in this phase provide valuable insights into the practicality and usability of the digital tenge. The involvement of Binance, a global leader in the cryptocurrency space, as a principal partner in the CBDC pilot, is a testament to the project’s significance.
Binance’s technical expertise and experience in digital asset management are expected to contribute significantly to the successful development and deployment of the digital tenge. Furthermore, Binance’s decision to establish a regulated digital asset platform in Kazakhstan underscores the country’s growing importance in the global blockchain and cryptocurrency landscape. This platform not only facilitates the conversion of fiat funds into digital assets but also serves as a gateway for Kazakhstani users to access a wide range of digital financial services.
The National Bank of the Republic of Kazakhstan’s establishment of the National Payment Corporation and its collaboration with Binance mark significant milestones in the development of the digital tenge. This CBDC project holds the potential to transform Kazakhstan’s financial landscape, foster collaboration between traditional finance and DeFi, and enhance financial inclusion and international trade opportunities. As the pilot phase progresses and the 2025 implementation deadline approaches, the world will be watching to see how this ambitious venture unfolds.
