ASTANA – Kazakhstan expects digital tenge to be introduced in just three years to an economy that is already seeing a surge in cashless payments. National Payment Corporation CEO Binur Zhalenov said that digital tenge is not just a trend or hype, but a modern necessity.
Vinur Zhalenov will address a meeting in Astana on September 25th. Photo credit: Assel Satubaldina/The Astana Times.
Digital Tenge will be launched in three phases, ending in 2025 and the first phase starting in 2023.
“The introduction of Digital Tenge is not an end in itself. It needs to become a useful tool for ordinary Kazakh citizens and businesses,” Zalenov said at a meeting held in Astana on September 25. He spoke while talking about the progress of the project.
The project has been led by the National Bank of Kazakhstan (NBK) since 2021. Last year marked an important milestone as NBK completed a comprehensive analysis conducted in collaboration with key stakeholders including financial market participants, experts and international financial institutions. Determine the necessity of introducing digital tenge.
Digital tenge is a digital form of Kazakh currency, issued as a unique digital sequence (token) or as an electronic record stored in a special electronic wallet. It will be regulated by NBK.
Zalenov emphasized that Digital Tenge is designed to complement, not replace, existing payment methods.
“In general, digital tenge should be perceived as programmable smart money, through which many services can be created,” Zalenov said. “Digital tenge is a third form of money alongside cash and non-cash. It is not intended to replace cash.”
Plans for 2023
In 2023, two pilot industrial operations and research and development (R&D) projects will be launched in 2023, including rapid commercialization of scenarios based on digital tenge, testing of cross-border trading and public procurement scenarios, and trialing of advanced smart contracts. The focus will be on one area. Protecting market participants and stock exchanges in a secure environment.
The number of countries considering digital currencies is increasing. Screenshot from the Atlantic Council tracker.
This year, the company also plans to introduce digital vouchers, which are programmable payments.
“For example, consider school cafeterias. The state subsidizes free meals for students. The cafeterias are private organizations, and there are schools that receive state funding, and they have this card. We are building a service where when a child comes to the cafeteria and swipes their card, the payment is automatically transferred from their school account to the cafeteria account. This process involves digital It includes the Tenge smart contract. The advantage is that the entire payment process, including reporting, is fully automated,” Zalenov explained.
Given that digital tenge is bringing major changes to payment systems and relationships within financial markets, Zalenov emphasized the importance of proceeding in stages “so as not to break what is already working well.” did.
By the end of this year, the National Payment Corporation will publish a paper detailing how the Digital Tenge platform is being organized and the results of pilot projects, including unsuccessful projects.
“All of this will be openly discussed so that we can develop more actively,” he added.
The results of the work will also be presented at a financier conference in Almaty in November.
Distinctive features
According to Zalenov, digital currencies have several advantages.
This will make cashless payments more accessible even in places with limited internet access, improve the efficiency of spending public funds without compromising citizens’ anonymity, and make cross-border wholesale payments faster. It is expected to become cheaper and provide an opportunity to create new payments in the market. products and business models.
He said cross-border transactions often involve eight to 10 intermediaries and additional fees, but digital currencies allow direct transactions, reducing the number of intermediaries, increasing speed and reducing costs. pointed out that it would be reduced.
The team is also working on a feature that will allow people to use digital tenge from their cards, which Zalenov called interoperability.
“Now is the time to use digital tenge using POS terminals, QR, and NFC.” [near-field communication]. “This year, we will work with Visa and Mastercard to introduce interoperability services between Digital Tenge and their networks, allowing users to use Digital Tenge from their cards,” Zalenov said.
In contrast to global public skepticism over the possibility of government access to the transactions people make, Zalenov said maintaining user confidentiality is a top priority.
The team implements important security measures to prevent unauthorized access or monitoring of individual consumer transactions. Access to this information is strictly controlled and all transactions are conducted in accordance with existing laws.
Success depends on the person
NBK said in its latest report on September 18 that the value of Digital Tenge is directly proportional to the number of people and organizations using it.
Zalenov said the introduction of digital tenge should be as seamless as possible for people.
Implementation will also depend on what he described as “synergies” between central regulators and second-tier banks.
“It is these organizations that are adjusting to the needs and reactions of their clients and end users. They are the ones who create the final products. Our job is to help them create useful products. “It’s about creating tools, so-called Lego blocks, to do that,” he said.
Global interest in digital currencies is increasing at an unprecedented rate
Kazakhstan is not alone in this innovative journey. According to the American think tank Atlantic Council, 130 countries, together accounting for a staggering 98% of the world’s gross domestic product (GDP), are currently exploring and developing national digital currencies. This is a significant increase compared to just 35 countries in 2020.
Sixty-four of these countries are currently in advanced stages of research and development, including the creation, piloting, and even launch of digital currencies.
Zalenov shared an optimistic outlook, believing that Kazakhstan has the potential to shape the global discussion on digital currencies.
“It is very important for Kazakhstan to keep up. We can shape the global discussion on digital currencies, and by the time it goes everywhere, it will work well in our country.” he said.
Over the past few years, Kazakhstan has seen a significant increase in the use of digital technologies, mainly due to the pandemic. Kazakhstan Financial Association said in a report that the value of non-cash transactions in the first half of 2023 reached a record high of 63.1 trillion tenge ($131.1 billion), an increase of 40.8% compared to 43.9 trillion tenge ($91.2 billion). Ta. At the same time last year.
