Kyrgyzstan plans to integrate a digital currency, the digital som, into its financial system by 2027 through constitutional amendments and a specialized software system managed by the central bank.
Kyrgyzstan plan on Digital Currency
Public discussions regarding constitutional law amendments have been initiated by the National Bank of Kyrgyzstan with the objective of incorporating its own digital currency, digital som, into the nation’s financial system. This represents a significant stride toward a digitized economy.
The digital som will be integrated into the financial system through a “specialized software system” managed by the central bank, as per the proposed amendments published on Aug. 8.
The draft does not include terms such as “blockchain” or “distributed ledger,” but it does mention “smart contracts.” Consequently, the technical details of the platform are somewhat ambiguous.
The system’s design incorporates the introduction of “digital wallets” and “digital accounts.” Digital wallets will be accessible to individual users for transactions, while digital accounts will be specialized accounts administered by the platform operator for participants.
Banks and other financial institutions that participate in the platform offer applications that enable users to access these purses.
Central Bank Manages Encryption Keys
The digital som platform will facilitate transactions and interactions among its operator, participants, and consumers. The National Bank will issue the platform’s rules, which will establish the roles and responsibilities of each participant, the categories of transactions that are permissible, and the access conditions.
The draft specifies that the central bank, in its capacity as the platform operator, will be responsible for the oversight of the issuance and accounting of digital soms, as well as the platform’s operation and security measures, which include data encryption and authentication mechanisms.
The system is purported to facilitate both online and offline transactions, with offline payments enabling users to conduct transfers in the absence of an internet connection. Transactions are recorded on the device and subsequently synchronized with the platform.
By January 2027, the digital currency is anticipated to be thoroughly integrated into the financial ecosystem of the country, establishing a legal framework that is consistent with the rapid international development of digital currencies.
