Kyrgyzstan has announced the adoption of the central bank digital currency.
According to local media reports on December 10th, a bill amending certain legislative acts regarding the legal standing of the country’s digital currency, the digital Som, was approved by the Kyrgyz Parliament’s Committee on Constitutional Legislation.
The adoption of the digital currency issues by the nations central’s bank comes at a time when a rise in such trends has been observed globally.
Kyrgyzstan Top Officials Unveil New Bill for CBDC
As per local media reports, the document for the CBDC was started by the Cabinet of Ministers Chairman. Additionally, Mels Attokurov, the Deputy Chairman of the National Bank, gave a presentation on it.
The purpose of the bill was to establish a legal foundation and establish the status of the national currency as well as to initiate a pilot project on the “digital som” prototype.
CBDC’s Gain Global Traction
Central Bank Digital currencies have been a safer option for nation to implement given that digital assets have become an investor favorite in the last couple of years.
Although they may seem like a novel idea to some, CBDCs have existed for around thirty years. The Bank of Finland introduced the electronic cash known as the Avant smart card in 1993. Even though the system was eventually discontinued in the early 2000s, it can still be regarded as the first CBDC in history.
However, it was not until recently that research on CBDCs spread around the world, spurred by advancements in technology and a decrease in the use of cash. They are currently being investigated by central banks worldwide for their potential advantages, which include enhancing the effectiveness and security of payment systems.
CBDC: What Benefits Do They Have?
One of the main reasons why CBDC’s are famous is because of financial inclusions. CBDCs usually act as a bridge between the traditional financial markets and the crypto world.
In addition to encouraging financial inclusion, CBDCs can increase competition and strengthen domestic payment systems, which could improve access to capital, boost payment efficiency, and ultimately reduce transaction costs.
Additionally, CBDCs have the potential to decrease currency substitution—the practice of a nation using a foreign currency in addition to or instead of its own—and increase the transparency of money flows.
With all these advantages in place, more than 100 nations at present are either investigation or have already proposed a bill to bring CBDC’s into the financial systems of their nation.