The first phase of the pilot project to introduce digital tenge has been completed in Kazakhstan. According to the country’s National Bank, this is the third form of payment that can be used alongside cash and non-cash methods. Experts note that the digital tenge allows to quickly carry out complex transactions without the participation of traditional financial institutions. In addition, it will be possible to make a payment without Internet access. This is one of its main features.
“The fact that Kazakhstan is now trying to introduce the digital tenge and is looking at options, is not a novelty. It is a practice that started a couple of years ago. Many of the world’s central banks, including China, are actively working on digital currency. This whole initiative started because the world found out what cryptocurrencies are. In the case of our digital tenge, it will be fully supported by the national bank. That is, the national bank of Kazakhstan guarantees emission for its operation. In this regard, there will be high reliability as opposed to other private cryptocurrencies in the world,” explained analyst Galymzhan Aitkazin.
According to a study by the country’s National Bank, digital tenge will be stored as tokens on an electronic wallet in a user’s smartphone.
“All digital wallets are ultimately stored in the central bank of Kazakhstan. All transactions take place in this bank. That is, it is not different banks that pass information among themselves, but everything is happening only within the National Bank. That is the basic difference. Theoretically, if there are any fraudulent transactions and so on, it will be easier and faster to investigate them in a centralized system than in different, disparate commercial systems,” said Konstantin Pak, spokesperson for the Association of Financiers of Kazakhstan.
Experts of the Eurasian Development Bank note the importance of developing digital currencies on the territory of the Eurasian Economic Union. Their introduction will reduce the cost of cross-border payments and stimulate mutual trade in the EAEU region.
“We can say that the digital tenge will receive all those benefits that are common to all digital currencies. Businesses will be able to faster conduct the payment transactions and will also have lower costs as commercial banks will be excluded from the process between the central bank and the client. In addition, the state will be able to control the budget target through smart contract technology,” added Anton Malakhov, spokesperson for the EDB Centre for Integration Studies.
Experts note that this payment tool also bears possible risks. The National Bank of Kazakhstan is currently studying how the digital tenge can affect monetary policy. The final decision on its implementation will be made at the end of 2022 after a thorough study.
Translation by Assem Zhanmukhanova
Editing by Galiya Khassenkhanova