Kazakhstan’s Central Bank Recommends Phased CBDC Rollout From 2023 

Kazakhstan’s financial authorities have become the latest to favor a central bank digital currency (CBDC). However, while other countries look to launch their assets in a single transaction, Kazakhstan advocates for a systemic rollout.

One Step at a Time

Recently, the National Bank of Kazakhstan (NBK) released a paper outlining a recommendation for a rollout of its in-house central bank digital currency (CBDC), the digital tenge. In the paper, the financial regulator explains that the Kazakhstan government remains highly committed to its CBDC plan and has been conducting feasibility studies intending to find the appropriate rollout strategy.

While the paper’s content varies, the main point appears to be the NBK’s intent to release the digital tenge in phases. The bank explained that it made this choice after considering several factors, including the need for technological improvements, a stronger national infrastructure, and a regulatory framework.

With the country still making gradual progress on these fronts,  a phased rollout of the CBDC could be the perfect strategy as opposed to a singular, encompassing launch. The digital tenge is expected to be launched in 2023, with a planned introduction into a commercial application that will last until the end of 2025.

Crypto for Financial Inclusion

Kazakhstan’s foray into CBDC launches began in 2022 at the height of the asset’s massive craze. At the time, the country’s government had been working on launching a retail CBDC that would be available for businesses and individuals across the country. 

The government designed a series of hypothetical scenarios, testing how the digital tenge could be used between second-tier banks and other financial industry players. The tests also explored the use of the asset for cross-border transactions under Kazakhstan’s regulatory framework. 

The current conflict in neighboring Russia and Ukraine has also intensified the need for a CBDC. As more citizens from both countries cross into Kazakhstan to flee the war, the government has been looking at cryptocurrencies as a way to ensure financial inclusion and cater to the needs of these immigrants. 

In September, President Kassym-Jomart Tokayev confirmed that they would be looking into a way to legalize crypto-cash conversions if they see an increased demand for it. Speaking at the Digital Bridge international forum, Tokayev pointed out that Kazakhstan is looking to become an international leader in digital technology. The country, which is currently third in the global mining space behind China and the United States, is looking to legalize crypto once they notice significant demand for it fully. 

Kazakhstan’s reinforced commitment to CBDC development is coming at a time when several other countries are also looking towards incorporating these assets into their economies. 

Several countries have committed to testing CBDCs in different capacities, including Australia, Spain, Brazil, and the United Kingdom. Nigeria also recently announced a monetary policy aimed at reducing cash circulation in the economy – a move which many believe is aimed at improving the adoption of its CBDC (the eNaira), released last year.