Recently, there have been frequent actions in the global digital currency field. South Korea's central bank has started real trading tests for the digital won, and the UAE central bank is also accelerating the advancement of the digital dirham. Amid this wave, Kyrgyzstan is not lagging behind; its central bank digital currency, 'digital som', is also receiving significant attention.
I. 'Digital Som': A Key Leap from Legislation to Implementation
Kyrgyzstan's President Sadyr Japarov signed the CBDC bill, officially granting 'digital som' legal tender status. This move lays a solid legal foundation for the development of 'digital som', marking a key step towards its formal issuance.
According to the bill, the National Bank of the Kyrgyz Republic has been granted exclusive rights to issue digital currency and will subsequently undertake a series of operational management responsibilities. The prototype testing is scheduled to begin in early 2025, which is crucial, similar to comprehensive testing before a new car hits the road. It will help identify and solve potential issues in a timely manner, optimizing functions and laying the foundation for large-scale promotion. It is worth mentioning that a decision on whether to formally issue the 'digital som' is expected to be made by the end of 2026, allowing ample time for subsequent preparations and evaluations.
II. Unique Technology: Integrating Innovation While Considering Various Needs
'Digital som' has a distinctive technical design. Unlike some digital currencies that are fixated on distributed ledger technology, it combines smart contracts with centralized management by the national bank.
The central bank's centralized management acts like a 'stabilizer' for the financial system. The issuance and circulation of currency are under the control of the bank, effectively preventing financial risks and maintaining market stability. Smart contracts serve as an 'efficiency assistant', making transactions more automated and transparent. The cooperation between both parties ensures that the 'digital som' is both safe and efficient.
In addition, the 'digital som' platform supports online and offline transactions. In areas with poor network connectivity, users can still conduct transactions normally, with transaction data temporarily stored locally and synchronized once the network is restored. This feature expands the usage scenarios, but to truly realize it, several technical challenges must be overcome.
III. Wide Impact: Domestic Economic Upgrading and International Experience Sharing
Domestically, once the 'digital som' is fully launched, it will bring numerous benefits. For ordinary citizens, financial services will become more convenient; previously, handling business required visiting banks and filling out various forms, but in the future, it might just take a mobile phone to resolve everything. For merchants, payments will be quicker, settlement cycles will shorten, and the efficiency of capital turnover will improve, especially for small and medium-sized businesses, relieving much pressure. From a macroeconomic perspective, the implementation of monetary policy will be more precise and effective, better regulating economic development.
From an international perspective, countries are exploring the development path of central bank digital currencies. China's digital yuan pilot program is constantly expanding, South Korea has launched a digital won testing, and the UAE is also accelerating the digital dirham process. Kyrgyzstan's 'digital som' provides new ideas and experiences for the world. Different countries' digital currencies have unique characteristics in terms of technology, application scenarios, and regulation. Mutual exchange and learning can jointly promote the development of global digital currencies.
The development of Kyrgyzstan's 'digital som' is timely, and it is expected to bring surprises to the domestic economy and the global digital currency landscape in the future. Let's wait and see!
