Kazakhstan uses its central bank digital currency (CBDC) pilot project to finance the construction of a rail line connecting it with China. The National Bank of Kazakhstan (NBK) launched the digital tenge, a programmable digital currency, ensuring an efficient and transparent use of funds. Kazakhstan’s CBDC also oversees funds’ distribution to intended recipients at the right time.
Kazakhstan’s CBDC Enters Second Phase of Integration
NBK added that utilizing digital tenge in the pilot project highlights the second phase of integrating CBDC in the state’s financial framework. Moreover, the bank considers this technology’ efficient spending and better control over funds’ regarding funds disbursement.
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The Dostyk-Moiynty rail line was initiated in November 2022. It connects China with the Western market, opening new opportunities for both countries. This project aims to accomplish its operations by the fourth quarter of 2025 using allocated digital tenge.
Speaking on the latest development, NBK noted in a statement:
During the pilot launch of the digital tenge platform, the money allocated to finance the project was marked. The marked digital tenge is paid only to organisations that have fully fulfilled the required obligations.
The project’s payment was distributed to the whole supply chain, including contractors and suppliers. Furthermore, the bank added that advanced technology helps reduce risks of misappropriation and ensure a seamless spending experience.
Alongside NBK, the government of Kazakhstan and the Anti-Corruption Agency plan to implement similar pilot projects in various sectors, including agriculture, construction, and social businesses. This step will aid the state’s legal authorities in ensuring a transparent approach to payment settlements beyond the borders. Besides, more financial institutions will join this venture as the project expands, NBK added.
NBK also intends to expand digital currencies for tax administration departments, creating a secure and robust digital asset framework. Nonetheless, the government will publish the results of the second phase of CBDC development in late 2024.
Kazakhstan’s Recent Developments in CBDC
The initial phase of digital tenge started in November 2023, and officials examined CBDC successfully as a suitable financial technology for cross-border payments. Moreover, the state’s CBDC infrastructure has already integrated with the Binance Smart Chain network.
On July 10, during Chinese President Xi Jinping’s visit to Kazakhstan, the NBK and the People’s Bank of China agreed to collaborate on joint research and development on CBDCs.
The memorandum approved will promote knowledge sharing, joint research activities, and staff training in both countries. Kazakhstan plans to launch its CBDC project entirely by 2025. This collaboration between the two countries will eventually result in an innovative approach to digital technology adoption. Both states will shape economic standards with the help of CBDCs and pave the way for a seamless digital framework worldwide.
Unlike traditional finance, these digital advancements with CBDC will lead to cooperation, higher access, and efficient payments in settlements on an international level. The payment system that allows a smooth funds transfer across the globe will eventually result in the mass adoption of digital assets.
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