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China and Kazakhstan have formed a strategic partnership to collaborate on Central Bank Digital Currency (CBDC) research. This initiative aims to boost knowledge sharing, enhance expertise, and improve employee competencies through joint training and research projects.
The People’s Bank of China (PBoC) and the National Bank of Kazakhstan (NBK) are partnering as global interest in CBDCs continues to grow. This agreement involves sharing expertise in CBDC development and implementation, conducting joint research projects, and improving the skills of employees engaged in CBDC research and development.
The development of a CBDC can enable faster, more secure, and cost-effective cross-border transactions, which are vital for international trade and economic integration. Observers note that a China-Kazakhstan co-development of CBDCs could lead to increased economic efficiency, reduced transaction costs, and improved financial inclusion.
Looking ahead, the partnership between China and Kazakhstan is expected to evolve significantly. Kazakhstan, which has been an observer in the CBDC project, may formally signal its intention to become a core participant following the completion of the joint research.
Global Race for CBDCs
Countries worldwide are accelerating their efforts to adopt CBDCs to enhance financial inclusion, improve payment efficiency, and reduce reliance on traditional currencies. However, these digital currencies face competition from established digital payment platforms like Paytm and Google Pay, which are popular among users.
The Reserve Bank of India has taken significant steps towards modernizing its financial system by piloting a wholesale CBDC, known as the e-rupee-W, for financial institutions and a retail CBDC, the e-rupee-R, for the public.
In Indonesia, the central bank launched Project Garuda in 2022 to introduce a digital e-rupiah. This initiative aims to enhance financial inclusion and facilitate cross-border payments, positioning Indonesia as an innovative player in the digital currency landscape.
Thailand’s central bank has been testing a CBDC called the Retail Central Bank Digital Currency (CBDC-R) since 2020. The ongoing pilot seeks to improve financial inclusion and increase payment efficiency, reflecting Thailand’s commitment to digital innovation in its financial sector.
Other countries have also made notable strides in the adoption of CBDCs. The Bahamas launched the world’s first CBDC, the Sand Dollar, in 2020, achieving a relatively high adoption rate, with over 15% of the population using it. Similarly, the Eastern Caribbean Central Bank introduced DCash in 2021, now operational in eight member countries, to support cross-border payments.
In Sweden, the central bank, Riksbank, has been running a pilot for its e-krona CBDC since 2020, aiming to ensure the continued provision of a state-backed payment method in an increasingly digital world. Meanwhile, the U.K is exploring the potential launch of a CBDC, with the Bank of England and HM Treasury focusing on complementing cash and bank deposits.
The European Union is currently investigating the feasibility of a digital euro, with the European Central Bank examining its design and potential impacts. However, the European Parliament has advised caution, recommending to “abstain (but be prepared)” while the investigation continues.
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