Kyrgyzstan is advancing plans for its central bank digital currency (CBDC), the digital som, following parliamentary approval of a draft law that establishes its legal and operational framework.
The National Bank of Kyrgyzstan will oversee the issuance and operation of the digital som, with prototype testing scheduled for early 2025. Based on the results of these trials, a decision on full implementation is expected by the end of 2026. The digital som will function as legal tender, exclusively issued by the central bank through a centralized platform responsible for its distribution, accounting, and security.
To ensure widespread usability, the digital som platform will support both online and offline transactions. This feature aims to enhance accessibility in areas with limited internet connectivity. Offline transactions will be stored locally on user devices and synchronized with the central system once connectivity is restored. However, questions remain about the practical implementation of offline capabilities, a challenge faced by central banks globally.
In August, the National Bank initiated public discussions on constitutional amendments to facilitate the integration of the digital som. The proposed framework includes digital accounts for participants and digital wallets for individual users, accessible through banking applications and other financial services.
Unlike many CBDC initiatives, Kyrgyzstan’s draft law does not explicitly mention blockchain technology. Instead, it focuses on centralized management by the National Bank and incorporates smart contracts to enhance functionality.
The digital som is expected to be fully integrated into Kyrgyzstan’s financial system by January 2027, marking a significant step in the country’s digital transformation and modernization of its monetary system.
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