Kazakhstan has launched a pilot project to use its digital tenge, a central bank digital currency (CBDC), to fund the construction of a rail line to China. This initiative utilizes “marked” or programmable digital tenge to ensure that the allocated funds are used as intended and reach the correct recipients at the right time.
This project represents the second phase of the CBDC’s introduction in Kazakhstan, aimed at improving transparency, targeted use, and efficiency, according to a statement from the National Bank of Kazakhstan (NBK).
Government Money Spent as Intended
The digital tenge was marked throughout the supply chain using the existing interfaces of market participants in the usual format. The money was disbursed upon the completion of the work:
“During the pilot launch of the digital tenge platform, the money allocated to finance the project was marked. The marked digital tenge is paid only to organizations that have fully fulfilled the required obligations.”
The marked CBDC was used to expand the rail line between Moyynty in central Kazakhstan and Dostyk on the Chinese border, which is part of the Belt and Road transit corridor intended to connect China with Western markets.
Funds from the Kazakhstan National Fund sovereign wealth fund were used in this project. The Kazakhstan government and the state Anti–Corruption Agency plan to extend the use of marked digital tenge to targeted expenditures in agriculture, construction, and social benefits, the central bank added.
Summary Review: Kazakhstan’s use of programmable CBDC for infrastructure projects highlights the potential for increased transparency and efficiency in public spending, setting a precedent for other sectors such as agriculture, construction, and social welfare.
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