Kyrgyzstan to Launch Digital Som by 2027

Kyrgyzstan to Roll Out Digital Currency by 2027

The National Bank of Kyrgyzstan has launched public consultations regarding the draft changes in constitutional law, which will further open up the way for the national digital currency, called the digital som. It is one giant step towards appreciable digitisation of the economy.

Digital Som Integration

The draft amendments published on August 8 foresaw that the digital system would be introduced into the financial system through a "specialized software system" managed by the central bank. While the draft does not mention either "blockchain" or "distributed ledger," it mentions "smart contracts," which also creates some obscurity in technical aspects related to the platform at large.

Digital Accounts and Wallets

This will come with two key features: "digital accounts" and "digital wallets." Digital accounts are special accounts for the participants, as managed by the operator of the platform. It is also going to come with digital wallets for individual users to conduct transactions. They will be made accessible through the apps given by banks and other financial institutions that are part of the platform.

Central Bank to Oversee Security

The digital SOM platform will provide a means for transactions and interactions between the operator, participants, and users. The National Bank, being a platform operator, shall set the rules, define the roles of all participants, their functions, and responsibilities, and manage access to the platform. The central bank will issue and track digital signatures and ensure that the operation of the platform is secure, including oversight of encryption and authentication methods.

It will support online as well as offline transactions. In this respect, the system will allow users to make transfers when there is no internet connectivity, and transactions will be recorded on the device, after which synchronisation with the platform will be reviewed later.

Full Integration by 2027

The digital som should be integrated into the financial system of Kyrgyzstan by January 2027, providing a legal base for a world that moves fast in the evolution of digital currencies.