Kyrgyzstan is inching toward launching its own digital
currency at the central bank after President Sadyr Zhaparov signed legislation
granting the digital som legal tender status. The signed amendments to Kyrgyzstan's constitutional
law empower the National Bank of the Kyrgyz Republic to issue Central Bank Digital Currency (CBDC), the digital som,
define its usage rules, and oversee the platform on which it will operate. While the law does not confirm a full-scale launch, it
formalizes the digital som's legal standing and allows pilot testing to proceed
later this year.Legal Framework Now in PlaceAccording to the president's office, the law aims to
"launch a pilot project of a prototype of a national digital
currency" and to create the conditions necessary for its legal and
technical development. Kyrgyzstan's parliament reportedly passed the
legislation in March before the president's final approval on April 17. With
this law in place, the central bank gains exclusive control over issuing the
digital som and must establish measures to secure the currency against fraud
and misuse. However, a final decision on full implementation isn't
expected until the end of 2026, giving the country time to assess outcomes from
its pilot.The country plans to begin testing the digital som
platform this year. The National Bank will lead the trial phase, which is
intended to evaluate the system's performance and security before committing to
a nationwide rollout.Kyrgyzstan joins a growing list of countries exploring
digital currencies. While more than 100 nations have initiated CBDC projects,
only a few, including the Bahamas, Nigeria, Zimbabwe, and Jamaica, have
gone live with a digital currency.The CBDC effort comes as Kyrgyzstan positions itself
more broadly in the digital finance space. Earlier this month, former Binance
CEO Changpeng Zhao signed an agreement to advise the country on blockchain
policy.Regional Context and Global Debate President Zhaparov said the initiative could enhance
economic development and virtual asset security, creating new business
opportunities. Kyrgyzstan also benefits from favorable conditions for
crypto mining, including abundant and underutilized hydropower resources. The
International Energy Agency notes that while hydropower supplies over 30% of
the country's energy, only a fraction of its full potential is currently in
use.Kyrgyzstan's cautious approach contrasts with that of countries like the U.S., which has largely avoided active CBDC
development.

This article was written by Jared Kirui at www.financemagnates.com.

CBDC Central Bank Digital Currency

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