Kyrgyzstan CBDC Tracker

Kyrgyzstan, or the Kyrgyz Republic, is in the research phase. However, the National Bank of the Kyrgyz Republic began looking for CBDC vendors and developers in the spring of 2024 so it may soon enter the pilot phase.

CBDC History and Development

In 2021, the National Bank of the Kyrgyz Republic’s annual report noted that “a draft Digital Som Concept was developed to promote digital payment technologies.”

In 2022, the National Bank of the Kyrgyz Republic’s annual report noted that the “Digital Som Concept was approved, according to which the National Bank will additionally issue a digital form of the national currency.”

In March 2024, the National Bank of the Kyrgyz Republic announced it had “received proposals from twelve interested companies for testing the digital som prototype in an experimental mode.” Those companies included Axellect, DCM, Ltd., EMTECH, Inc., FIS, Inc., G+D Filia GmbH, Knox Networks, Inc., MONTRAN, Nahmii, Ltd., R3 Corda Ltd., SICPA/Nabatech Inc., TCS Quartz, Ltd., and Xiamen Strait Chain Technology Co. One month later, the central bank announced it had reviewed the proposals and the Steering Committee on Digital Som would weigh which vendor to move forward with.

In August 2024, the National Bank of the Kyrgyz Republic announced the release of draft laws concerning the legal status of its planned CBDC. The public was given one month to share comments. Later that same month, the central bank announced the “Digital SOM Ideathon” as an “opportunity to present your proposals and solutions during the preparatory phase of testing the digital som prototype—a Central Bank Digital Currency (CBDC).” Applications were accepted from August 22 to September 20.

Human Rights and Civil Liberties Concerns

Kyrgyzstan earned a 27 out of 100 in Freedom House’s 2023 Freedom in the World report. As noted in Freedom House’s report and elsewhere, surveillance, political repression, and corruption are major issues for Kyrgyzstan. The issuance or adoption of a CBDC in Kyrgyzstan could worsen these issues.

Although the law prohibits arbitrary surveillance, the U.S. State Department has reported that “the government failed to respect these prohibitions.” For example, there were reports of “police planting evidence during investigations and wiretapping suspects without court orders.” Unfortunately, a CBDC could be used to greatly expand surveillance by putting financial records on government databases by default.

Civil society groups have also faced increasing pressure from the government, according to the U.S. State Department. Laws related to the “incitement of interethnic, racial, religious, and interregional hatred,” “public calls for violent seizure of power,” and “attempted mass riots” have been increasingly used and “broadly interpreted these provisions to sanction speech, which affected the ability of civil society activists and independent journalists to operate.” Freedom House also reported that anticorruption journalist Bolot Temirov was arrested on drug charges in 2022 just days after accusing the head of the Kyrgyz State Committee for National Security of corruption. Unfortunately, a CBDC could be used as another tool in this effort. Across the world, governments have often turned to freezing and seizing the money of activists, political rivals, and protestors to undermine the opposition. A CBDC would make such initiatives easier by allowing governments to take direct control of each citizen’s finances.

“Corruption is pervasive in politics and government,” according to Freedom House. “Political elites use government resources to reward clients—including organized crime figures—and punish opponents.” The existence of pervasive corruption is a major concern with CBDCs because it calls into question any promises that might be made by the government to limit surveillance, control, or other risks of CBDCs. Furthermore, the existence of corruption calls into question whether CBDC policies might be designed to exert political favoritism through subsidies, price controls, or other targeted restrictions.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.

For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.