Bank of PNG to introduce Digital Kina Currency - CBDC

By: PETER S. KINJAP - ONLINE CONTRIBUTOR

FEBRUARY 13, 2025

(Extracted from the book titled "BITCOIN

DREAM: Hope, Hype and Chaos".)

Last time in this column, we had a look at how

blockchain and bitcoin could help PNG as well

as what PNG Digital Cluster is doing to

harness the digital transformation in the

crypto space and artificial intelligence (AI).

This week, we will have a look at a use case of

blockchain application, and is PNG's very own

cryptocurrency - the Digital Kina.

The Bank of Papua New Guinea (BPNG) is

working on a new type of money called Digital

Kina. This is not paper money or coins but a

digital version of the Kina. It is a Central Bank

Digital Currency (CBDC), which means it is

money made and controlled by BPNG, just like

the normal Kina. The Digital Kina is stored and

used through mobile phones, computers, and

special apps instead of physical cash.

This idea is being tested with help from JICA

(Japan International Cooperation Agency) and

Soramitsu, a Japanese technology company.

The Proof of Concept (PoC) test was done

between December 2024 and January 2025 to

see how the Digital Kina can work in PNG.

How Does Digital Kina Work?

The Digital Kina works using blockchain

technology, which is the same technology

used in cryptocurrencies like Bitcoin. But

unlike Bitcoin, Digital Kina is controlled by

BPNG, making it safe and stable.

People will be able to use Digital Kina on their

mobile phones or computers to send and

receive money instantly. Businesses, banks

and even the government can also use it for

payments. It is just like using cash but

everything happens digitally.

The Digital Kina is a big step forward for PNG.

It will make payments faster, safer and more

affordable for everyone. It will also help

businesses grow and improve how the

government manages money. As PNG moves

towards a digital future, Digital Kina will play a

major role in making the country's economy

stronger and more connected to the world.

For PNG citizens, learning about digital

payments and how to use Digital Kina will be

important. The more people understand and

adopt this new system, the more PNG will

benefit from a modern and digital economy.

Kepa and Maya caught themselves learning

about the Digital Kina at down town, Port

Moresby and their crypto chat takes off here:

"Hey Maya, have you heard about the Digital

Kina?" Kepa asked with a high tune.

"No, I haven't. What is it?" Maya answered

with a low voice.

"The Digital Kina is PNG's version of a Central

Bank Digital Currency (CBDC). It's a digital

form of our national currency, issued and

regulated by the Bank of PNG," Kepa

lamented.

"The Digital Kina is PNG's version of a Central

Bank Digital Currency (CBDC). It's a digital

form of our national currency, issued and

regulated by the Bank of PNG' Kepa

lamented.

"How does it differ from the physical Kina we

use daily?" Maya asked, taking a sip from his

soft drink.

"While the physical Kina exists as banknotes

and coins, the Digital Kina exists solely in

electronic form. It's designed to complement

cash, providing a more efficient and secure

means of payment," Kepa answered.

"What are the benefits of using the Digital

Kina?" Maya quired, wanting to know how it

helps users.

"There are several advantages:

• Convenience: It allows for quick and easy

transactions without the need for physical

cash.

• Financial Inclusion: It can provide access to

financial services for people in remote

areas where traditional banking

infrastructure is lacking" Kepa explained.

"How can one access and use the Digital

Kina?" Maya asked.

"Users can access the Digital Kina through

digital wallets provided by authorized financial

institutions. For instance, Kina Bank offers

various digital banking services, including

personal online banking and mobile apps,

which could support Digital Kina transactions,"

Kepa answered.

"Is the Digital Kina already in use?" Naya

asked.

"As of today, the Bank of PNG is exploring the

concept and has initiateda proof of concept

for the Digital Kina. This involves testing and

evaluating its feasibility before a full-scale

rollout" Kepa added.

"Are there any concerns or challenges

associated with the Digital Kina?" Maya

grinned.

"Yes, like any digital system, there are

challenges such as ensuring cybersecurity,

protecting user privacy and providing reliable

internet access across the country. The

authorities are working to address these

issues to ensure a secure and efficient

system," Kepa continued.

"It sounds promising. I'Il keep an eye out for

updates on the Digital Kina" Maya said.

"Definitely. It's an exciting development that

could transform how we handle money in

PNG" Kepa said.

The Digital Kina is part of a global movement

toward CBDCs, with countries like China

(Digital Yuan), the Bahamas (Sand Dollar) and

Sweden (e-Krona) leading the way. For PNG,

the Digital Kina represents an opportunity to

leapfrog traditional financial infrastructure and

create a more inclusive and efficient financial

system.

The Digital Kina is an ambitious project by

BPNG to modernize the country's financial

system, promote financial inclusion and

improve payment efficiency. While challenges

remain, the initiative has the potential to

significantly benefit PNG's economy and its

people.

Peter S. Kinjap is the author of the book titled

"BITCOIN DREAM: Hope, Hype and Chaos"

for PNG students and policymakers. Next

week, we will look at CellMoni and Bitcoin in

comparison to Digital Kina. For comments,

email: howarigtraders@gmail.com