Kazakhstan’s pilot project for its central bank digital currency (CBDC), the digital tenge, has been hailed as a success, with the National Bank of Kazakhstan and the National Payment Corporation of Kazakhstan (NPCK) outlining a series of enhancements for 2024.
During the pilot phase, the digital tenge was utilized in various applications, including providing free school lunches in Almaty through the Onay card system, initially designed for transit payments. The Kazpost postal system facilitated these transactions.
Collaborating with Visa and Mastercard, four local banks issued plastic cards to focus groups, enabling both online and in-person purchases, as well as ATM cash withdrawals. Merchants had the option to accept digital tenge or convert them to traditional tenge.
The pilot also demonstrated the digital tenge’s interoperability by integrating it into existing point-of-sale and QR systems, making the cards usable within and outside Kazakhstan. This level of compatibility was touted as a first for a CBDC.
Other innovative uses of the digital tenge included cross-border payments via SWIFT, CBDC-backed stablecoin issuance on platforms like Binance and KASE, gold tokenization, VAT collection via smart contracts, and testing a move-to-earn application.
For 2024, the NPCK and the National Bank have ambitious plans, including expanding the network of intermediary banks, enhancing decentralized finance applications, and facilitating offline transactions. This last goal aims to boost financial inclusion, especially in areas with limited internet access. They also plan to join more cross-border payment projects and focus on regulatory, legislative, and security enhancements for the digital tenge.
NPCK CEO Binur Zhalenov, in a recent interview, reassured that the digital tenge would not be used for user surveillance, addressing privacy concerns.