The National Bank of Kazakhstan has issued a digital analogue of the national currency, tenge, as part of its commitment to streamline daily financial transactions and reduce corruption.
speak at press event On November 21, National Bank Vice Chairman Berik Sholpankurov described Digital Tenge (DT) as “a new payment tool that responds to the realities and challenges of the digital innovation economy.”
Although DTs share some features with cryptocurrencies, they differ in important ways. Most notably, it is issued centrally by a national bank, rather than circulating within an open, unregulated blockchain network.
Vinur Zhalenov, head of the National Payments Corporation, a subsidiary of the National Bank responsible for the development of DT, said: discussed The potential of digital platforms to increase transparency in government spending.
“Money in a Digital Tenge budget can be marked for a specific use. Once the expenditure is completed, this mark disappears,” Zalenov said. “This…will ensure control over budget spending by the people and the government.”
Zalenov sought to allay privacy concerns by insisting that the government would not use the platform to track people’s personal financial movements. Meanwhile, currency holders can control and scrutinize how their currency is used, he said.
As an example, Jarenoff said parents can program DT to control their children’s spending, such as banning the purchase of cigarettes or alcohol.
According to DT’s creators, it will now be possible to use DT for transactions even when buyers, sellers, or both are offline. This is an especially attractive option in areas of the country where mobile signal is weak or non-existent.
Digital currency developers said their project is based on China’s experience with the introduction of the digital yuan. Zalenov, who claims he already receives his salary in DT, said Kazakhstan could follow the same route as China in using biometric data such as fingerprints to make payments.
National Bank began working on the rollout of Digital Tenge about two years ago, initially focusing on security issues. Last year, it tested the platform with local financial institutions. The plan is to expand the scope of the current currency to include features such as cross-border transactions by 2025.
Kazakh citizens are already accustomed to using financial technology products even for the simplest transactions. Local lender Caspian Bank has nearly cornered the digital trading market with its e-wallet app.
However, this has become a headache for the tax office. For example, at one stage retailers in the marketplace were free to avoid paying sales tax by convincing buyers that remittances were simply “financial assistance.”
according to law Adopted in 2021However, financially speaking, traders and taxi drivers who have traditionally done much of their business behind the scenes will need to split their mobile cash transfers between personal and business accounts. Under the law, banks were obliged to disclose information about cash transactions to tax authorities.
Despite protests over privacy, cynics suspect the Digital Tenge project is designed to give authorities another means of monitoring who spends what, where, and when. There may be a tendency to doubt.
Almaz Khumenov is a journalist based in Almaty.
This article was first published on Eurasianet here.