Kazakhstan has announced the creation of a new agency to lead its push into digital finance as attempts to launch a central bank digital currency (CBDC) gather significant steam.
The National Payment Corporation (NPC) will play a prominent role in developing the digital tenge and advancing the country’s foray into open banking. According to a statement by the National Bank of Kazakhstan (NBK), the NPC was formed following several structural changes within the banking regulator.
The central bank announced reorganizing the Kazakhstan Center for Interbank Settlements (KISC) into the NPC, making similar changes to its other subsidiaries.
According to the official disclosure, the NPC will continue the legacy of the KCIS to ensure the smooth running of Kazakhstan’s payment system. The banking regulator added that the newly constituted unit will uphold the principle of “equal accessibility” for industry players to promote efficiency.
The NBK noted that the structural changes were necessary to bring the country one step closer to its goals for a world-class payments ecosystem. The banking regulator expressed optimism that the newly constituted NPC will speed up the development of retail and wholesale CBDCs.
“The reorganization of KISC into the National Payment Corporation will further improve the efficiency, security, and reliability of the country’s payment infrastructure, as well as accelerate the pace of introduction of innovative products and digitalization of the financial sector,” according to the central bank’s announcement.
Kazakhstan has been exploring the idea of a CBDC since 2021, conducting preliminary studies before committing to a full-scale rollout by 2025. The central bank notes that its motivations to launch a digital tenge revolve around improving financial inclusivity and improving the existing conditions in the payments space.
The bank is also keen to explore cross-border functionalities for the digital tenge but confirms that it will adopt a phased approach with the development.
“Taking into account the need for technological improvements, infrastructure preparation, development of an operating model and a regulatory framework, it is recommended to ensure a phased implementation over three years,” read an NBK report from 2022.
Testing the waters
Kazakhstan’s attempt to launch a CBDC has seen it join a study by the Society for Worldwide Interbank Financial Telecommunications (SWIFT). The study is designed to test the interoperability of CBDCs across multiple jurisdictions, with the Hong Kong Monetary Authority (HKMA) joining the fray.
Early in the year, SWIFT launched a similar study with the central banks of France and Singapore, recording impressive results during the experiment. SWIFT says it is eyeing a future where digital currencies can co-exist with fiat-based payment systems while eliminating the rise of “digital payment islands.”
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