Kazakhstan Finance Digital Currency to be Launched
The National Bank of Kazakhstan recently completed a successful pilot project and announced its plan to launch the Digital Tenge, the country’s central bank digital currency (CBDC), in three stages by 2025, starting with the first stage in the fall of 2023. The implementation of the Digital Tenge aims to enhance financial inclusion, improve transparency in public procurement, promote innovative financial services, and facilitate cross-border settlements. The Digital Tenge will allow cashless payments without internet access, increasing the availability of digital transactions in areas with limited connectivity. By leveraging the advantages of CBDCs, Kazakhstan aims to improve financial inclusion, enhance public funds management, promote innovation in financial services, and facilitate cross-border transactions.
The growth of non-cash transactions, especially online payments, has been significant as digital payment services continue to improve in quality and convenience. From a macro-financial stability perspective, local banks remain in a strong position to weather potential headwinds after a series of mergers and state-sponsored capital injections and has a Fitch Banking Industry Risk Indicator (BIRI) Score of 72, placing Kazakhstan between Latvia and Croatia. The volume of non-cash card transactions in Kazakhstan reached 102.8 trillion Tenge ($229 billion U.S. Dollars) in 2022, accounting for 99% of the country’s GDP. The introduction of the Digital Tenge and its offline payment capabilities will further contribute to the growth of digital transactions in both urban and remote areas.
The use of the Digital Tenge with real consumers is expected to begin in the fall of 2023, starting with social benefits and pensions credited to individuals’ digital wallets and part of public procurement paid in digital currency. By the end of 2023, the first phase of the Digital Tenge project will be put into commercial operation. By 2025, full industrial implementation, integration of all market participants, and cross-border connectivity are anticipated.
The launch of the Digital Tenge will occur in three stages. The first stage focuses on social payments and public procurement, while the second stage involves creating an offline payment settlements infrastructure for areas with limited internet access. The third and final stage will see the full commercial operation of the Digital Tenge.
Opportunities for U.S. Companies:
While there is already a growing demand for compliance services in relation to Kazakhstan’s geopolitical situation and Russian sanctions, with the implementation of the CBDC and the integration of digital payment systems, financial institutions and businesses will need additional assistance in assessing and managing cybersecurity risks and developing related customized solutions.
Also, as Kazakhstan adopts digital payment systems and implements CBDC, there are opportunities for U.S. companies in the financial services sector in areas, such as:
- digital banking, mobile payments, and financial technology solutions;
- consulting services related to financial regulation and risk management.
Developing strong partnerships with local stakeholders and understanding the cultural and business context will be essential for success in this market. U.S. Commercial Service is available to assist to provide U.S. companies with the support in providing the information about Kazakhstan’s regulatory environment and market research to understand the specific requirements and opportunities in Kazakhstan’s financial services landscape.
For more information, contact Aliya Shaikhina at the U.S. Commercial Service in Kazakhstan at Aliya.Shaikhina@trade.gov.
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