Project on National Digital Currency Requires Well-Developed Infrastructure and Cybersecurity Norms, Says Expert

NUR-SULTAN – The National Bank of Kazakhstan released a May 5 research report dedicated to the introduction of the digital tenge concept into the public forum of discussion. 

Magbat Spanov

The bank intends to study the benefits and risks and define the tasks solved by the digital currency. Based on this, the bank will decide on the need to introduce digital tenge with the requirements for technological infrastructure and regulation of issues related to the national digital currency, and consumer protection.

“Digital economy initially presupposes the creation of new financial instruments,” Magbat Spanov, an expert of the Institute of World Economics and Politics (IWEP) under the Nursultan Nazarbayev Foundation said in an interview for this story. “This will encourage the country’s economic breakthrough. From this point of view, the National Bank’s initiative to introduce a new form of monetary unit is welcomed.”

The expert noted that the creation of a new currency always comes with certain challenges. The financial regulators and institutions should be ready for this innovation as well as participants in these processes and people. 

According to the bank, the digital tenge will be a legal tender, a measure of economic value and a store of value. The bank will create a two-tier architecture to implement the platform, where financial market participants will provide payment services.

An informational and educational campaign among managers and employees responsible for financial functions in various key organizations is of great importance, explained Spanov. 

The introduction of a digital currency will have a positive effect on the government and large enterprises. The costs of the transaction and the commission will decrease, respectively, an increase in financial turnover is possible. If this process is successful, then the small and medium-sized enterprises and individuals can be involved in this process in the future.

At the same time, the introduction of new technologies is not an easy task. All the processes should be worked out to prevent any potential mistakes.

“A system should be protected in terms of cybersecurity,” said the expert. “And we should know who will be personally responsible for the safety of our country’s financial resources.” 

Spanov noted that if the system works successfully, then “we can expect an even more significant reduction in cash settlements and the volume of cash issued.” This will lead to significant savings in public funds allocated for the issue of national currency.

Perhaps, the introduction of digital payments between countries will be the next step, according to the expert, which will first require a well-developed technical and financial infrastructure. 

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