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Fantom Foundation has said it has been enlisted by one of Tajikistan's largest banks to develop a central bank digital currency (CBDC), which will eventually be deployed across the central Asian country. Fantom has signed a memorandum of understanding (MoU) with the OJSC Orienbank, making it one of the first blockchain projects globally to develop a CBDC solution for a national government. Orienbank and Fantom will be joined by the National Bank of Tajikistan to develop and run trials for the commercial and retail payment networks for a digitised version of Tajikistan's currency somoni (E-SOM).
The three institutions will roll out the digital currency nationwide after completing a successful trial, Fantom Foundation said in a statement.
Given the rapid popularity of cryptocurrency, many major economies have shown an inclination to develop their own CBDC to contain the influence of privately founded and developed virtual currencies. But people from developing countries may find CBDC more useful because it may reduce the cost of remittances with fewer or no commission charged on them. According to data from the World Bank, remittance inflows to Tajikistan made up 26 percent of the country's gross domestic product (GDP) last year. The Fantom solution reduces costs by eliminating intermediaries and transaction fees while accelerating payment processing and settlement. In Tajikistan, with large, unbanked populations, CBDC can encourage financial inclusion, said the statement.
Also, this deal cements Fantom's position as a major player in public sector blockchain initiatives. Lately, everyone is talking about the merits of digital currencies, with some also citing the drawbacks and disruption it may cause to the existing system. So, people are approaching this technology with caution, primarily because it's new.
In Tajikistan, Fantom's CBDC solution will undergo a period of testing. Following the trials, the currency will be rolled out nationally under the sandbox regulation of the National Bank of Tajikistan.
Only El Salvador has given Bitcoin the status of a legal tender. With Tajikistan exploring ways to have its own, it would make it the second country with a digital currency being used for commercial transactions.
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