While countries like the U.S. and others in Asia are still thinking about the issuance of CBDC, Kyrgyzstan has taken a clear step forward. The country has approved a pilot project for its own digital money called the digital som. This new version of the national currency will be treated as legal tender if the CB goes ahead with issuing a CBDC.
Kyrgyzstan Testing To Launch CBDC
On April 17, President Sadyr Zhaparov signed a new constitutional law that not only gives the digital som legal status but also gives the country’s central bank full authority to manage its future.
The National Bank of the Kyrgyz Republic will decide how it works, how people can use it, and when it will be available to everyone.
Right now, the final decision to roll out the CBDC nationwide will be made next year, testing is expected to begin in 2025. The country will begin a pilot project soon to see how it works in real life. A final decision on whether to fully launch it will be made next year.
What Makes This Special?
Unlike regular digital wallets or cryptocurrencies, a CBDC is issued and backed by the country’s central bank. That means it offers the security of a traditional currency but with the speed and convenience of modern technology.
Countries like Jamaica, the Bahamas, and the European Union are already testing or using CBDCs. Kyrgyzstan is now joining that list. On the other hand, countries like the United States are still thinking about it.
Why is Kyrgyzstan Opting For CBDC?
Kyrgyzstan wants to modernize its financial system and make digital payments easier and safer. Earlier this month, former Binance CEO CZ said he would help Kyrgyzstan build strong crypto rules. The government hopes this will help businesses grow and improve digital security.
Kyrgyzstan is also a great place for crypto mining because it has lots of clean hydro energy. Even though only 10% of its hydro power is used today, over 30% of the country’s energy already comes from water sources.
With this digital som project, Kyrgyzstan is showing the world it’s ready for the future of money.
