One month in, the digital tenge pilot project has been a success and is being used in payments and cross-border transfers, according to the Kazakhstan central bank.
The National Bank of Kazakhstan launched the digital tenge on November 15, becoming one of the global trailblazers of the CBDC movement. The rollout was spearheaded by the National Payment Corporation (NPC), a subsidiary of the central bank with a focus on digital payments.
In a report published on the eve of the central bank digital currency’s (CBDC) one-month anniversary, the NPC revealed that the pilot has been a success and has set the stage for a massive explosion in the digital currency’s adoption next year.
According to the report, the digital tenge was used to make simple payments, including in a pilot project providing free school meals.
The central bank also joined hands with VISA (NASDAQ: V), Mastercard (NASDAQ: MA), and four local banks to issue the “world’s first CBDC bank cards.” These cards allowed users to make payments at merchant stores, withdraw cash from ATMs, and conduct several other transactions in Kazakhstan and beyond. Other use cases included cross-border payments, tokenization of securities, and issuance of stablecoins.
The participating banks could all access the digital tenge via specialized APIs despite all of them using different IT systems. Additionally, the CBDC was available on digital asset platforms and was used as backing for tenge stablecoins.
In a corresponding interview, NPC chair Binur Zhalenov stated that a key feature of the digital tenge is its programmability. The CBDC “can be programmed at the token level,” he told Kursiv Media.
For instance, some digital funds can be specifically assigned to a purpose, like building a school. Once programmed, they can’t be used for any other purpose. Parents can also use the feature to determine how their children spend funds assigned to them.
This quality, which relies on the power of smart contracts, is controversial in the global monetary system as it takes away one of money’s most beloved quality—fungibility. While programmability has its place in the digital economy, critics argue that the government could abuse this to dictate what its citizens can spend their money on.
Several central banks have pledged to refrain from programmable CBDCs. They include the United Kingdom, where the HM Treasury has maintained that it won’t offer any programming features on the potential digital pound.
“If there was end-user demand for programmability features, then any programmability features would be designed by the private sector wallets, and users would have the option to use them if they so wished,” stated HM Treasury.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: Blockchain provides perfect foundation for CBDC
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
