A Freshened Spin on the Digital Tenge Saga
Kazakhstan Pushes Digital Tenge Project to Boost Transparency and Efficiency in Tracking Public Finance
Let's dive into the buzzing world of finance in Kazakhstan, shall we? On the 3rd of April, the Prime Minister, Olzhas Bektenov, gathered the crew for a chat on the implementation of the digital tenge and strategies to monitor the utilization of targeted budget funds. Sounds exciting, right?
Bektenov sees the digital tenge as a game-changer, revolutionizing the financial landscape and boosting the transparency of public spending - a move we can surely applaud! Photos courtesy of the Prime Minister's press service.
The powwow primarily revolved around the current state and future plans for building Kazakhstan's digital financial infrastructure, all tied to the digital tenge, increasing the traceability and efficiency of public funds.
Binur Zhalenov, advisor to the National Bank chair, spilled the beans on crucial components of the digital infrastructure, such as the interbank payment card system, Open API, and the Anti-Fraud Center. In an exclusive interview with The Astana Times YouTube channel, Zhalenov shared sexy details about the digital tenge's potential to transform the financial world as we know it.
The National Bank's systems now manage a whopping 90% of the country's payment turnover and nearly 30 million digital biometric identification requests. Illicit transactions amounting to 2 billion tenge (US$3.9 million) have been swifly nipped in the bud, and over 36,000 fraud cases unearthed.
At the moment, 108 organizations, including second-tier banks, key payment entities, and microfinance firms, are part of the digital infrastructure. In July, the launch of a service for interbank payments via QR with second-tier banks is on the cards.
A trial project using the digital tenge to ensure transparency in public fund usage was also on the table. So far, around 250 billion digital tenge have been dished out, with these unique digital tags enabling tracking of funds from allocation to final expenditure. This strategy has proven effective in tackling corruption-prone sectors.
Kazakhstan has also rolled out a digital VAT pilot project based on the digital tenge to streamline VAT administration and speed up refunds. Bektenov emphasized the importance of escalating the national digital financial infrastructure and widening the use of digital tenge. The digital tenge's introduction is crucial in transforming financing processes, ensuring greater transparency in how budget funds are spent.
Bektenov reaffirmed that the digital tenge is vital in redesigning financial systems and improving government spending transparency. He encouraged entrepreneurs to spill the beans on their supply chain and spending details when dealing with public funds.
The State of Play
The Digital Tenge, Kazakhstan's central bank digital currency (CBDC), made its grand entrance in November 2023, backed by four banks that have launched payment cards connected to the program, aiming to blend digital currency into regular financial operations. With a target for rapid implementation over the next three years, the Digital Tenge sets the National Bank on the path to leadership in CBDC innovations on a global scale.
Making a Difference
The Digital Tenge is set to amp up government spending transparency by offering a more transparent and efficient transactional process. Digital currencies provide real-time tracking of transactions, which can help combat corruption and enhance accountability in government spending. However, specifics on how the Digital Tenge will be used to make transparency a reality in government spending remain vague for now.
On the Horizon
- Broadening the Scope: The National Bank plans to expand the digital tenge's reach over the next three years, aiming for industrial-level operations.
- Integration: Further integration with existing financial systems and infrastructure is on the agenda to boost the efficiency and accessibility of financial services.
- Regulatory Cooperation: The Astana International Financial Centre (AIFC), with its innovative regulatory framework, is poised to play a pivotal role in supporting fintech and digital banking initiatives, including the Digital Tenge.
All in all, the Digital Tenge initiative signifies a significant leap forward in Kazakhstan's mission to overhaul its financial systems and boost transparency, aligning with broader goals of digital transformation and economic growth.
- The Digital Tenge, Kazakhstan's central bank digital currency, is anticipated to launch interbank payments via QR with second-tier banks in July, as part of the country's efforts to enhance the efficiency of its financial infrastructure.
- Binur Zhalenov, advisor to the National Bank chair, revealed that the Digital Tenge's traceability features allow for the monitoring of targeted budget funds, potentially reducing corruption in public spending.
- The Digital Tenge is expected to integrate technology to improve finance business in Kazakhstan, including the Open API and the Anti-Fraud Center, as part of the National Bank's plan to broaden the reach of the digital currency over the next three years.
- Prime Minister Olzhas Bektenov emphasized the importance of increasing government spending transparency and encouraged businesses to embrace the Digital Tenge, suggesting that it could play a key role in enhancing accountability in public finance.
