Kyrgyzstan Gives Legal Definition to Digital Som
The Parliament of Kyrgyzstan has adopted a historic draft of the law, which provided a legal framework for the country’s CBDC, digital som. With this development, Kyrgyzstan is poised to bring its financial system into the modern age and establish a secure, efficient, and inclusive digital payment infrastructure.
Digital Som Gets Legal Status
The new law declares the digital som legal tender, enabling the National Bank of them to regulate its issue, accounting, and distribution. It will be operated on a centralized platform with a focus on security and efficiency. This legal framework allows the digital som to coexist with traditional cash in the economy, offering a modern payment option to citizens and businesses.
Testing of the prototype digital som is expected to start at the beginning of 2025, while its implementation within them ,financial system is targeted for January 2027. When fully implemented, it will be an important instrument in facilitating payments and ensuring the acceleration of economic development.
Centralized Design with Offline Capabilities
While many countries are into the research of blockchain-based CBDCs, Kyrgyzstan’s digital som is a centralized digital currency controlled by the National Bank. The system will include smart contract functionality without full reliance on blockchain, which aligns with the nation’s technological and financial landscape.
Importantly, the digital som will also support offline transactions, which is very key for Kyrgyzstan, given that internet connectivity is not consistent across the country. Such offline transactions will be stored locally on user devices and synchronized with the system once internet connectivity is restored. While this feature increases accessibility, it brings a number of technical complications, which the National Bank is ready to overcome.
Advancing Financial Inclusion
The goal of the digital som is, therefore, one of increasing financial inclusion across Kyrgyzstan’s wide reaches. Digital wallets through banking apps and other financial service providers ensure that everyone-not just those with a bank account-can join in the digital economy.
Increasing access to safe and efficient payment systems can help improve the position of citizens in relation to these and further enhance economic activities generally.
Kyrgyzstan within the Global Landscape of CBDC
Kyrgyzstan is not alone in this trend; 134 countries are actively exploring CBDCs. In the testing of prototypes and public consultations, Kyrgyzstan takes the first steps in Central Asia to be on the edge of digital currency innovation.
If successful, it would be a precedent for the creation of CBDCs in developing economies and a new chapter in the financial history of Kyrgyzstan.
