The Phantom Foundation has said that it has been appointed by one of Tajikistan's largest banks to develop a Central Bank Digital Currency (CBDC). Fantom has signed a Memorandum of Understanding (MoU) with OJSC Orienbank, making it the first blockchain project to develop a CBDC for a central government globally. The National Bank of Tajikistan will also join OrionBank and Phantom to develop and run trials for a commercial and retail payment network for a digital version of Tajikistan's currency somoni (E-SOM).
The Phantom Foundation said in a statement that the three institutions would launch the digital currency across the country after a successful trial.
Given the rapidly growing popularity of cryptocurrencies, several major countries have expressed interest in developing their own CBDCs to control the influence of privately established and developed digital currencies. People in developing countries may find CBDCs more useful, as they either do not charge or charge very little, if any. According to World Bank data, remittance flows to Tajikistan accounted for 26 percent of the country's gross domestic product (GDP) last year. The CBDC created by Phantom will reduce costs by eliminating middlemen and transaction fees while expediting payment processing and settlement.
While this deal will make Fantom a major player in public sector blockchain initiatives. On the other hand, a large number of people are not calling digital currency a good option, citing the shortcomings and disruptions of the existing system.
In Tajikistan, Phantom's CBDC will go through trials. After the trial, the currency will be issued nationally under the sandbox regulation of the National Bank of Tajikistan.
Currently, only El Salvador has granted legal tender status to bitcoin. With Tajikistan finding its way, it will become the second country to have a digital currency used for commercial transactions.
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