Digital Transformation: The Ongoing Efforts of the Central Bank of Uzbekistan

Speaking at the 2nd international PLUS forum (entitled FinTech without Borders: Digital Asia), Shukhrat Fayzullaev, deputy director of the Payment Systems Department of the Central Bank of Uzbekistan (CBU), spoke about how the regulator is transforming Uzbekistan’s financial sector into a more digitally-friendly environment.

In particular, he noted CBU work in six major digital directions:

  1. Digital identification – CBU has okayed the use of remote biometric identification for credit and payment institutions; however, they recommend institutions remain cautious and make changes to internal control systems given the rise in popularity of deepfakes.
  2. RegTech/SupTech – a CBU working group has been established to develop a more effective supervision system, especially through the automation of supervisory processes. The World Bank is working with the group to design overall goals, collect and analyze data and develop new/updated regulatory requirements in this regard.
  3. Universal QR codes – although QR codes are used in Uzbekistan (including by commercial financial and payment institutions), they are mostly static and only able to be used in very specific situations. CBU is now working to establish the use of dynamic QR codes that are mutually recognizable by all market participants.
  4. Anti-fraud and cybersecurity – In response to a Presidential decree made this summer, CBU is forming a center to counter cyberthreats in the financial space.
  5. Individual access to the fast payment system – a fast payment that operates around the clock already exists; however, only business clients can access it through internet banking portals. CBU is now working on a way of granting access to individuals via mobile apps and payment institutions.
  6. A central bank digital currency (CBDC) – CBU is undertaking a pre-project study for a CBDC. The purpose of this study is to: (1) analyze the prerequisites and economic efficiencies of introducing a CBDC, (2) examine the experience of other countries that have introduced or are introducing CBDCs (e.g. Russia, Turkey) and (3) assess the technical, human and financial resources that will be required to develop a CBDC.

In addition, the deputy director also noted that CBU is actively discussing open banking, Islamic banking and the creation of a regulatory sandbox.