Kyrgyzstan defines the framework for the digital som: a new stage in the development of the CBDC
Date: 2024-12-12 Author: Gabriel Deangelo Categories: IN WORLD
The Kyrgyz authorities have taken an important step towards the launch of the digital som, their central bank digital currency (CBDC). The country's parliament approved in the first reading a bill that defines the legal status and framework for the use of the digital currency.
The initiator of the bill was the Cabinet of Ministers, and its implementation will be one of the key tasks in the financial sector of the state. After full implementation, the digital som will be recognized as legal tender throughout the country, and its issuance and distribution will be undertaken by the National Bank of Kyrgyzstan.
The platform on which the digital currency will operate will be centralized and will ensure the security and efficiency of transactions. The prototype of the system is planned to be tested in early 2025, and full implementation is expected in January 2027.
Unlike many countries that are actively using blockchain to create CBDC, Kyrgyzstan has chosen a centralized approach. Despite the possibility of integrating smart contracts, the main emphasis is on local financial and technological conditions.
The digital som platform will support both online and offline transactions. This is especially important for regions with unstable internet connections. Offline transactions will be stored on users' devices and synchronized with the system when the connection is restored.
For the convenience of users, the system will offer digital wallets accessible through banking applications and financial institution services. This will help connect traditional monetary systems with digital innovations.
Public discussions of the digital som began back in August. One of the topics of discussion was amending the Constitution to ensure the successful integration of the new currency.
Deputy Chairman of the National Bank Mels Attokurov emphasized that the digital system will ensure the security of financial transactions and will modernize the country's economy.
The state considers the digital som as a tool for increasing financial inclusion, especially in remote areas. The implementation of secure and convenient payment solutions should be in line with global trends in digital finance.
The final decision on the full-scale launch of the system will be made after testing and analysis is completed in late 2026. Successful implementation of the project will strengthen Kyrgyzstan's position as one of the leaders in the field of digital currencies in Central Asia.
According to the Atlantic Council, 134 countries, accounting for 98% of the world economy, are exploring the possibilities of CBDC. Of these, 66 countries have achieved significant success, and countries such as the Bahamas, Jamaica, and Nigeria have already introduced digital currencies into circulation.
In China, the digital yuan has become the largest project, with a transaction volume of almost $986 billion, significantly exceeding last year's figures. This project has an impact on sectors such as education and tourism, and serves as a benchmark for other countries.
Thus, Kyrgyzstan joins the global trend aimed at reducing the use of cash and competing with cryptocurrencies such as Bitcoin.
