Approved by the Resolution  

of the Board of the National Bank 

of the Kyrgyz Republic 

№2025-П-25/3-1-(ВД) 

dated January 24, 2025. 

STRATEGIC DIRECTIONS 

in activity conducted by the National Bank of the Kyrgyz Republic 

for 2025-2030  

The National Bank of the Kyrgyz Republic (hereinafter – the National Bank) conducts its activity in the interests of the Kyrgyz Republic to ensure its sustainable development. 

Achieving and maintaining price stability in the economy by implementing the appropriate monetary policy remains the main objective of the National Bank’s activity. 

Creating favorable environment in the banking and payment systems, ensuring their reliability and security, maintaining the purchasing power of the national currency, developing innovative financial technologies, complying with the laws in the field of consumer protection and financial inclusion are the key to stable development of the financial sector and integral conditions for long-term economic growth and development of the Kyrgyz Republic. 

The National Bank follows the following principles in order to realize the tasks set by the Constitutional Law of the Kyrgyz Republic “On the National Bank of the Kyrgyz Republic”:  

- independence of activity in exercising of its powers and authorities;  

- accountability, openness and providing information to the public about the decisions taken in implementation of tasks and objectives;  

- predictability of actions in the short- and medium-term period;  

- maintaining professionalism and competence of the employees.  

Vision of the National Bank of the Kyrgyz Republic for 2025-2030: 

In the sphere of monetary policy  

- improvement of the interest rate channel of the monetary policy transmission mechanism; 

- development of the interbank money market;  

- maintaining flexible exchange rate. 

In the sphere of the financial sector  

- improvement of the regulatory legal framework;  

- development of the principles of Islamic finance; 

- updating digitalization of the banking and microfinance sectors; 

- improvement and strengthening of the banking system sustainability; 

- interaction with the participants of the financial and public sectors, the central banks of the EAEU countries and the international communities in terms of countering computer attacks by exchanging information on vulnerabilities, threats and information security incidents; 

- development of sustainable financing, including green financing in the banking and microfinance sectors; 

- encouraging greater financial inclusion for businesswomen; 

- improving financial literacy of the population. 

In the sphere of the payment systems  

- achieving the share of non-cash payments and settlements to the level of 80-90 percent through development of the digital financial infrastructure, methods of non-cash payments, and development of the digital payment technologies; 

- testing the prototype of the Digital Som platform. 

In the sphere of cash circulation 

- ensuring continuity, reliability, and security of cash circulation. 

In the sphere of ensuring the activity of the National Bank 

- ensuring the continuous process of the National Bank’s activity; 

- ensuring the availability of the automated and information systems of the National Bank, as well as their development in accordance with the current Concept of Digital Transformation of the Kyrgyz Republic. 

MONETARY POLICY  

Price stability is a key factor to ensure macroeconomic stability and sustainable economic growth of the Kyrgyz Republic in the long term. Maintaining moderately low and stable inflation contributes to preserving the purchasing power of the population and increasing confidence in the national currency and the financial system as a whole. 

Monetary policy as part of the economic policy of the state will be implemented within the framework of the overall strategy of economic development of the Kyrgyz Republic and will contribute to creation of favorable business environment, maintaining the investment climate, improving the living standards of the population, reducing the uncertainty of economic entities when taking decisions. 

Monetary policy will be focused on achieving and maintaining the inflation rate within the target set by the National Bank.  

The monetary policy of the National Bank is a forward-looking policy, since the decisions made in the field of monetary policy influence the key macroeconomic indicators of the country with a certain lag. The monetary policy is developed on the basis of inflation forecasts for the short- and medium-term periods obtained as a result of coordinated and economically sound forecast of the economic situation development in the Kyrgyz Republic and in the external environment. 

In conducting monetary policy, the National Bank’s activity is based on the following principles: 

- consistency, predictability and transparency of the monetary decisions; 

- maintaining flexible exchange rate; 

- improving the monetary policy transmission mechanism, which characterizes the impact of the monetary policy decisions on price movement through various channels of influence: interest rate, exchange rate, credit and communication channels;  

- development of the interbank money market depth; 

- active communication policy of the National Bank on monetary policy issues. 

ENSURING SUFFICIENCY OF  

THE NATIONAL BANK’S INTERNATIONAL RESERVES  

International reserves are the assets owned by the National Bank and used to fulfil the tasks and powers stipulated by the Constitutional Law of the Kyrgyz Republic “On the National Bank of the Kyrgyz Republic”. 

Ensuring sufficient level of the National Bank’s international reserves is among the main strategic directions of the National Bank being necessary for implementation of the monetary and foreign exchange policies.  

Moreover, sufficient level of the international reserves is necessary for timely servicing the obligations of the Cabinet of Ministers of the Kyrgyz Republic in foreign currency, fulfilling the obligations of the National Bank in foreign currency and ensuring operational activity of the National Bank.  

The main measures to achieve sufficient level of the National Bank’s international reserves are as follows: 

- conducting transactions on purchase of precious metals in the domestic market of the Kyrgyz Republic from the entities engaged in producing precious metals; 

- making deals and conducting investment transactions; 

- carrying out transactions with precious metals in the external financial markets. 

Thus, the National Bank within the framework of ensuring sufficient level of international reserves for the period of 2025-2030 will try to: 

- maintain the purchasing power of the national currency and price stability; 

- ensure financial stability of the Kyrgyz Republic; 

- service in due time the obligations of the Cabinet of Ministers of the Kyrgyz Republic in foreign currency; 

- maintain the level of international reserves sufficient to cover at least three months of imports; 

- be prepared for external economic crises and global shocks; 

- contribute to improvement of the international rating of the Kyrgyz Republic.  

MODERNIZATION OF THE NATIONAL BANK’S 

AUTOMATED TRADING SYSTEM  

The National Bank plays a key role in development of the financial system of the Kyrgyz Republic. Introduction and development of various types of interbank transactions is an important task of the National Bank.  

The National Bank performs several functions in the interbank financial market of the country:  

- acts as an organizer of trade and operator/administrator of the automated trading system;  

- is an agent of the Cabinet of Ministers of the Kyrgyz Republic in terms of initial placement and redemption of government securities and keeping depository records of government securities;  

- is a direct participant of the domestic financial market, which conducts monetary and foreign exchange policy. 

Availability of an appropriate infrastructure – the trading system is among the main conditions for the successful implementation of the National Bank’s activity. The National Bank’s participation in the financial market contributes to enhancing the role and significance of the interbank market.  

Modernisation of the current automated trading system of the National Bank is dictated by the need to improve the current and introduce new capabilities for business processes, introduce new information security measures, increase productivity, and reduce risks and vulnerabilities. At present, the entire SWIFT community is experiencing transition from the old MT format messages to the new MX format due to introduction of ISO 20022 standard in the SWIFT system. This transition is also one of the reasons for modernisation of the automated trading system of the National Bank, as the current system does not support data processing in the new format. 

The main objectives for modernisation of the automated trading system of the National Bank are: 

- creation of new trading sections for gold and precious metals transactions, expansion of the derivatives range; 

- creation of a section/module of the financial instruments compliant with the principles of Islamic finance; 

- possibility of using government securities in the secondary market irrespective of the primary placement site through creation of a “depository bridge” between the National Bank and the external depositories; 

- other improvements to existing functions and trading mechanisms. 

Modernisation of systems and business processes in the context of increasing the competitiveness of the financial sector will contribute to:  

- improvement of implementation and efficiency of the monetary policy and introduction of new monetary policy instruments; 

- reduction of credit, operational, liquidity and payment risks; 

- increasing confidence in the banking sector of the Kyrgyz Republic, as well as development and strengthening of the country’s financial system; 

- increasing attractiveness and confidence in the domestic infrastructure, as well as motivation of the banks to improve their transactions and products in the future.  

In general, modernisation of the financial market infrastructure will increase efficiency, as well as reduce the risks in conducting the financial transactions by the participants, and will also contribute to introducing global best practices. 

FINANCIAL SECTOR DEVELOPMENT  

The National Bank’s activities will be focused on introducing the best international practices in terms of simplifying the population’s access to financial services and their reliability through digitalization of the service formation stages. 

The main priority areas for 2025-2030 will be as follows: 

1. Improvement of the regulatory legal framework relating to: 

- supervision and regulation of the activity conducted by the organizations supervised by the National Bank according to the country’s legislation, international standards and best-practices; 

- creation of the special regulatory regimes (regulatory sandboxes) to test innovative financial products and technologies;  

- introduction of the digital technologies in the activity conducted by the microfinance organizations (mobile banking, online lending, credit risk assessment using digital technologies);  

- introduction of the digital profile for the financial services users with electronic identification tools to create conditions for full-fledged electronic services; 

- countering fraudulent actions and unauthorized transactions;  

- countering the financing of terrorism and money laundering; 

 - expanding the list of guarantee instruments in the guarantee funds in order to increase the availability of financing within the framework of credit-guarantee relations; 

- stimulating the financing of entrepreneurial activity among women; 

- introducing ESG principles in the banking and microfinance sectors; 

- ensuring disclosure of information by the banks and non-banking financial-credit organizations on sustainable development and the impact of climate risks; 

- establishing criteria for green projects according to the international standards, including verification of green projects. 

2. Development of the principles of Islamic finance 

The National Bank will continue to develop the principles of Islamic finance as a promising area of banking services offered to the population.  

Attention will be paid to increasing public awareness about the principles of Islamic finance. In the long term, increased knowledge and involvement of the population in the market of Islamic financial products will allow the citizens to better understand the economic issues, which will give them the opportunity to make independent choices in use of the banking services. 

The National Bank will continue to incorporate the best international practices on the principles of Islamic finance into its regulations to facilitate development of the Islamic financial services infrastructure. This will contribute to growth of the financial-credit organizations offering Islamic banking services and the consumers of Islamic banking services, which will finally result in improvement of the financial intermediation and welfare of the population.  

3. Activities on digitalization of the banking and microfinance sectors will include: 

- improvement of the legal framework for introduction of the digital technologies in the activity conducted by the microfinance organizations (mobile banking, online lending, credit risk assessment using digital technologies);  

- formation of the legal framework for use of the electronic signature and its connection with the digital profile of the financial services users to create conditions for full-fledged electronic services; 

- improvement of the legal framework for information security, taking into account global experience in standardization and regulation of information security;  

- improvement of the legal framework to reduce fraudulent activities;  

- improvement of the requirements for creating the special regulatory regimes (regulatory sandboxes) to test the innovative financial products and technologies; 

- development of sustainable financing (green financing); 

- increasing financial inclusion for businesswomen; 

- transition from form-centric to data-centric monitoring of the supervised entities;  

- transition to risk-based approach in supervisory activities in the field of information security: formation of a risk profile for a credit organization and its analysis.  

4. Enhancing and strengthening the sustainability of the banking system and non-banking financial-credit organizations through: 

- step-by-step capitalization of the commercial banks depending on their size and indicators of systemic importance; 

- gradual capitalization of non-banking financial-credit organizations depending on their size and indicators; 

- establishing requirements for the commercial banks to implement internal capital adequacy assessment procedures (ICAAP) and supervisory review and evaluation process (SREP), which are an important element of Basel II and best practices in banking supervision and will further improve the quality of risk management, corporate governance and reduce management, capital and liquidity risks, as well as the commercial banks’ sustainability. 

5. Strengthening interaction with the participants in the financial and public sectors, the central banks of the EAEU countries and the international communities in terms of countering computer attacks.  

6. Transition to risk-based approach in supervisory activities in the field of information security by forming a risk profile of credit organizations based on the results of inspection, collection of regulatory reporting and indicators of the organization’s operational stability. 

7. Improving financial literacy of the population of the Kyrgyz Republic 

The National Bank will continue taking measures to improve financial literacy of the population to form a financially literate civil society. Financial literacy will help to increase the efficiency in using the financial instruments, raise awareness and coverage of the population about the benefits and risks of the financial products, which will contribute to growth of deposits in the banking system, improve the quality of the loan portfolio and expand investment opportunities. 

Implementation of measures to improve the level of financial literacy of the population to achieve an indicator above 12 points out of 21 according to the assessment methodology of the Organization for Economic Cooperation and Development (according to 2021 survey, the indicator was 11.6 points, which is the average for the countries of the Commonwealth of Independent States). 

8. Currently, the market for virtual assets is regulated by the Financial Market Regulation and Supervision Service of the Kyrgyz Republic. In turn, more and more financial transactions are also conducted using virtual assets. The National Bank, as a supervisory body, also needs to study this trend in the context of integration of these assets into banking and non-banking spheres, in particular in exchange transactions. 

Currently, the use of virtual assets has been observed in the following transactions: 

- as a means of payment and savings; 

- as money transfers through purchase and sale of virtual assets; 

- exchange transactions. 

The above transactions are subject to regulation and/or supervision by the National Bank in order to monitor and manage risks in the banking/non-banking/payment systems. Already today one can observe different types of fraudulent operations in this direction, in particular, the citizens increasingly frequently apply to the National Bank with the questions after transactions conducted using virtual assets. In this regard, the National Bank will consider the need to regulate and supervise transactions with the use of virtual assets in the future. 

9. Improvement of the system of protection of the rights of banking services consumers  

The National Bank will continue to improve legislative norms aimed at protecting the rights of the consumers of financial and banking services and improving the quality of rendered services. With a view to improving the consumer protection system, the National Bank will take measures to identify the root causes of complaints and improve internal procedures of the financial-credit organizations in the area of consumer protection.  

Introduction of supervision over the market behavior of the banking service providers will make it possible to supervise the way banking organizations interact with the consumers and check compliance by the professional participants of the financial market with the requirements of the legislation of the Kyrgyz Republic, as well as its behavior towards the clients.  

In general, introduction of the behavioral supervision will make it possible to identify illegal and unfair behavior of the financial organizations, so that the financial organizations would be interested in competition among themselves and provide better products and services without abusing insufficient consumer awareness and low financial literacy of the population.  

PAYMENT SYSTEM 

Ensuring efficiency, safety, and reliability of the payment system is one of the tasks of the National Bank defined by the Constitutional Law of the Kyrgyz Republic “On the National Bank of the Kyrgyz Republic”.  

The National Bank together with the commercial banks, payment organizations/payment system operators, as well as the government agencies will continue to work on increasing non-cash payments and settlements in the Kyrgyz Republic, which will be focused on achieving the share of non-cash payments to the level of 80-90 percent by the end of 2030. 

To fulfil this task, the efforts of the National Bank will be focused on maintaining the operation of the payment systems at a high technological level through introduction of the new digital and financial technologies.  

In order to continue the systemic and gradual development of digital transformation of the financial sector, the National Bank is pursuing a course for development of the intersystem integration of the payment systems, as well as at the country level.  

Currently, development of the interaction operator’s functionality to provide the consumers with convenient and accessible payment instruments, including for cross-border payments, remains an urgent issue. For this purpose, the National Bank and Closed Joint-Stock Company “Interbank Processing Centre” (hereinafter - CJSC “IPC”) will continue to develop interoperability of the payment system to implement fast payments and transfers using new identifiers (in addition to QR codes) with the possibility of making cross-border payments.  

The National Bank, CJSC “IPC” and the participants of the payment systems will continue to develop the single payment space with the functionality of quick transfers and payments by QR codes with the use of new identifiers for making payments in real time mode. 

In order to ensure secure and safe exchange of information between the participants of the banking sector with a view to develop new products and services that meet the needs of the consumers and, in the long term, contribute to increased competition, the National Bank has developed the Concept of Open Banking Development in the Kyrgyz Republic.  

Introduction of the principles of open banking should result in financial inclusion in the Kyrgyz Republic. 

The National Bank will also continue studying new information technologies. 

Along with implementation of the State Program on increasing the share of non-cash payments and settlements in the Kyrgyz Republic for 2023-2027 approved by the Resolution of the Cabinet of Ministers of the Kyrgyz Republic and the National Bank of the Kyrgyz Republic No. 737/67-7 dated December 29, 2023, as well as the Resolution of the Cabinet of Ministers of the Kyrgyz Republic and the National Bank of the Kyrgyz Republic No. 680/66-6 dated December 16, 2022 “On Acceptance of Payments for State and Municipal Services in Non-Cash Form”, achievement of the above indicators will be facilitated by systematic implementation of the following measures:  

- development of the national payment system, payment infrastructure to serve the customers on accepting/conducting payments in non-cash form, including expansion of the agent network; increase in peripheral equipment: POS-terminals, payment terminals, installed QR codes, other devices. At the same time, the number of ATMs in the country will gradually decrease in the future, and the commission fee for cash withdrawal through ATMs will increase; 

- promoting and creating favorable conditions for introduction of the innovative payment technologies that expand the geography of payment services and reduce their cost for households and economic entities, in particular by providing them with remote access to banking services. For example, new payment solutions will be introduced in mobile applications, including expansion of the payment options through third-party applications and partner websites for non-cash payments. Integration with new cashless payment services will be carried out on an ongoing basis, which will generally improve the convenience and speed of payments for the customers; 

- stimulating non-cash payments and settlements through various bonus programs and discounts for the population using non-cash payments, as well as cashback programs for certain categories of expenses; 

- improving the regulatory legal framework for the payment system, taking into account modern trends and rapid development of the digital payment technologies;  

- cooperation with the public and private sectors on development of the payment system components, financial and retail markets; 

- interaction with the participants of the payment system to create conditions for transferring state bodies, state-funded organizations and business entities to non-cash settlements using various forms of payment instruments; 

- ensuring the required level of transactions security involving use of the bank payment cards, e-money, QR codes and other e-banking systems according to the international standards; 

- testing the prototype of the Digital Som platform; 

- development of digital payment technologies; 

- regulation of payment market participants’ activities. 

TESTING THE PROTOTYPE OF THE DIGITAL SOM PLATFORM 

The Digital Som is an initiative of the National Bank to create and implement a national digital currency. Development of the Digital Som is part of a broader strategy for digitalization of the financial sector and aims to improve the accessibility, reliability and transparency of the financial services in the country.  

The Digital Som will operate on a blockchain-based platform that will provide secure and fast payments, create new accelerated terms of agreements for the financial sector in the form of smart contracts through integrations with the financial and government systems. 

The purpose of creating the Digital Som (issuance of the national currency “Digital Som” in digital form) is to ensure financial inclusiveness, security and transparency of payments in the country, thereby increasing access to financial services, which will contribute to development of the digital economy in the Kyrgyz Republic.  

Implementation of the Digital Som project for the period 2025-2030 includes the key stages based on the 5P methodology recommended by the International Monetary Fund. 

The first stage of testing will provide proof of Digital Som Concept by testing the basic functions of the platform and analyzing its capabilities under near-realistic conditions. 

The second stage of testing involves creation of the prototypes of the Digital Som to test it with a limited number of users, which will allow to identify possible technical and organizational issues, as well as to test compatibility with existing payment systems. 

After the second stage of testing is completed, the project will move to the Pilot stage, where test transactions with real payments, including P2P (person-to-person payments), B2B (business-to-business payments) and G2C (government transactions) will be conducted.  

A report will be prepared based on the analysis of the data from the pilot stage, and if positively assessed, the project will move to the production mode, which involves connection of the payment system participants and full implementation of the Digital Som. 

In subsequent phases in 2027-2030, it is planned to expand the functionality of the platform, including: 

- integration for cross-border payments: interoperability with similar platforms in other countries is being considered, which will enable cross-border payments, improve international cooperation and simplify financial transactions for the citizens and businesses; 

- support for smart contracts: implementation of smart contracts is planned, which will automate fulfilment of the transaction terms and ensure transparency of transactions, which will enable introduction of the programmable payments and optimize processes, increasing the efficiency of transactions;  

- adaptation and optimization of the platform: ongoing work to improve the platform will focus on increasing transaction processing speed, cybersecurity and resilience, while the platform will be updated in line with new technologies and user needs to ensure its long-term relevance. 

In parallel, work will be carried out to improve the regulatory legal acts of the National Bank on the issue of operational rules, regulations of the operator of the Digital Som platform and rules for connection of the payment system participants. 

CASH CIRCULATION  

In order to ensure continuity, reliability and security of cash circulation in the Kyrgyz Republic, the National Bank will continue to improve technological processes of cash circulation, which includes:  

- minimization of human factor risks in processing of the national currency banknotes, which provides for reduction of operational risks in automated processing and packaging of cash;  

- optimization of the technology for destroying dilapidated banknotes and defective coins;  

- improving the safety and quality of money processing aimed at establishing a policy of “clean cash” in circulation and detecting counterfeit banknotes at the primary stage of banknote processing, which is a preventive measure to prevent the spread of counterfeit banknotes of the national currency in the territory of the republic. 

ENSURING THE ACTIVITY OF THE NATIONAL BANK  

In order to ensure the National Bank’s activity, work will be conducted in the following areas:  

- introduction of ESG-principles into the National Bank’s activity; 

- disclosure of information in the field of sustainable development of the National Bank; 

- increasing public confidence in the National Bank, improving work with the population expectations; 

- enhancing the efficiency of external and internal communication channels, taking into account the needs and interests of the target groups; 

- continuous improvement and enhancement of the information and cyber security system and information security management system in the National Bank; 

- ensuring efficiency, safety and reliability of the information infrastructure of the National Bank, as well as formation of the cyber security system of the financial-credit and payment sectors of the Kyrgyz Republic in order to ensure and maintain the state of their security; 

- strengthening interaction of the National Bank with the international organizations and central banks of partner countries for the purpose of development within the framework of integration associations and bilateral relations; 

- improving management of the National Bank’s business processes, timely identification of potential operational and other risks that may adversely affect the achievement of the strategic objectives set for the Bank;  

- continuous improvement of the business continuity management system in the National Bank; 

- implementation of measures within the framework of the current Concept of Digital Transformation of the Kyrgyz Republic; 

- ensuring accessibility of the automated and information systems of the National Bank and their development in accordance with the requests of the structural units of the National Bank; 

- expansion and improvement of document exchange with the authorized state bodies by means of modernization of the automated electronic document management system in terms of introduction of electronic digital signature.