Kazakhstan Introduces Central Bank Digital Currency for China Railway Project – Modernity in Investment Context.

Kazakhstan Introduces Central Bank Digital Currency for Railway Project to China

Kazakhstan has initiated a pilot project to introduce the central bank digital currency, tenge, for payment towards the construction of a railway line to China. This project aims to ensure efficiency, transparency, and purposeful utilization of funds allocated for infrastructure investments.

Utilization of Tagged Tenge in the Project

Within the project, tagged tenge is being utilized, which are programmable digital assets that enable the control of fund flows and ensure that they reach the intended recipients in a timely manner. This marks the second phase of introducing the central bank digital currency (CBDC) in Kazakhstan.

Participation of Banks in the Project

Funds for the project are sourced from the National Fund of Kazakhstan. The project involves, among others, Bank Halyk Kazakhstan, with other financial institutions gradually being brought in as the initiative progresses.

Planned Project Development Directions

Other projects related to tax administration, cross-border payments, and “settlements in the field of digital assets” are also planned. The final version of digital tenge is set to be implemented by 2025, aiming to enhance the efficiency of financial transactions in the country.

Collaboration with China and Future Plans

In July, the National Bank of Kazakhstan (NBK) and the People’s Bank of China signed a memorandum of understanding for joint research on central bank digital currencies. The expansion of the project will also encompass areas such as expenditures related to agriculture, construction, and social welfare.

Comments from Western Experts

Some Western experts comment that programmability through smart contracts in the central bank digital currency may be a controversial element, but they also acknowledge benefits such as consumer protection and prevention of unintended technology applications. As a result, the introduction of digital tenge may have both positive and negative consequences, which will be monitored as the project evolves.