- Many countries are considering launching their own digital currency.
- The E-SOM in Tajikistan will make use of blockchain technology.
- Fantom Foundation and Orienbank collaborate with Tajikistan’s National Bank.
One of Tajikistan’s leading banks has recruited Fantom Foundation to build a central bank digital currency (CBDC), which will eventually be distributed throughout the Central Asian country. Fantom has inked an MoU with the OJSC Orienbank, making it one of the first blockchain initiatives in the world to establish a CBDC solution for a national government. The National Bank of Tajikistan will join Orienbank and Fantom in developing and testing commercial and retail payment networks for a digitized version of Tajikistan’s currency, the somoni (E-SOM).
After a successful trial, the three institutions will roll out the digital currency countrywide, according to the Fantom Foundation.
Due to the rapid growth of bitcoin, many major economies have expressed an interest in developing their own CBDC in order to limit the influence of privately generated virtual currencies. CBDC, on the other hand, maybe more valuable to people in underdeveloped nations because it reduces the cost of remittances by charging less or no commissions. Remittance inflows to Tajikistan accounted for 26 percent of the country’s gross domestic product (GDP) last year, according to World Bank figures.
By removing intermediaries and transaction fees, the Fantom system lowers expenses while also speeding up payment processing and settlement. CBDC can increase financial inclusion in Tajikistan, which has a big unbanked population, according to the statement.
Fantom’s status as a leading player in public sector blockchain initiatives is also cemented by this agreement. Everyone is talking about the benefits of digital currencies lately, with others pointing out the negatives and potential disruption to the existing system. As a result, people are cautious when it comes to this technology, partly since it is fresh.
Fantom’s CBDC solution will be put to the test in Tajikistan. Following the trials, the money will be pushed out across the country under the National Bank of Tajikistan’s sandbox oversight.
Only El Salvador has recognized Bitcoin as legal tender. Tajikistan is looking at developing its own digital currency, which would make it the second country to use for business contracts.