The Fantom Foundation has signed an MoU with OJSC Orienbank to demonstrate its CBDC solution for use in the Republic of Tajikistan.
The Fantom Foundation announced that it has signed a Memorandum of Understanding with the OJSC Orienbank, one of the largest banks in Tajikistan, to trial a hybrid CBDC platform for eventual deployment across the Republic of Tajikistan. This monumental agreement establishes Fantom as one of the first blockchain projects globally to begin development of a CBDC solution for a national government.
Fantom and Orienbank will work with the National Bank of Tajikistan to develop and trial commercial and retail payment networks for the E-SOM, the digitized version of the Tajikistani Somoni. By integrating the renowned developer Andre Cronje’s Iron Bank protocol, the Fantom-based product will also include a low-fee foreign exchange with simple fiat on- and off-ramp. Fantom, Orienbank, and the National Bank will aim for a nationwide rollout upon completion of a successful demonstration.
The Orienbank deal signals Fantom’s emergence as a major player in public sector blockchain initiatives. Fantom offers transformative technologies for governments seeking to transition to the modern digital economy. The platform’s near-zero fees and fast transactions provide the security, reliability, and scalability that intensive digital currency applications require.
Digital currencies have been a hot topic of discussion lately. Consumers increasingly prefer electronic payments, and Central Banks are eager to offer solutions encouraging the use of national currencies rather than third-party digital payment systems.
In countries like Tajikistan with large, unbanked populations, CBDC can encourage financial inclusion. Fantom CBDC makes banking available through mobile apps that connect to digital wallets. Beyond user-accessiblity, connectivity allows financial institutions to extend services like microloans to underserved areas.
Another area that Fantom CBDC will significantly impact is remittances. Globally the average cost of sending a remittance is 6.38% of the total amount. Such fees add up quickly, especially when one considers that remittance inflows to Tajikistan made up approximately 26% of GDP (2020).
The Fantom solution drastically reduces costs by eliminating intermediaries and transaction fees while accelerating payment processing and settlement. Functionality added by the Iron Bank protocol mentioned above will make it easy for both remittance senders and receivers to work with their local currencies. Other benefits that Fantom offers include automatic tax deduction, streamlined monetary policy, and more.
The CBDC solution will initially undergo a period of testing and refinement. Following initial trials, Orienbank and Fantom will seek to roll out the product nationally under the sandbox regulation of National Bank of Tajikistan.
Commenting on this milestone for Fantom, CEO Michael Kong stated that, “This agreement with Orienbank validates our efforts to build a viable CBDC solution combining research into the economics and usability of digital currencies with the technology of our high-speed, low-cost platform.” With reference to Tajikistan’s recovery from a pandemic-induced recession, COO Barek Sekandari further added that “We seek to implement tools that will not only sustain but accelerate this economic expansion.”
From interbank and large business payment systems to small business transactions and P2P money transfers, Fantom CBDC is poised to transform existing currency and payments ecosystems in Tajikistan and beyond.