Domestically produced soms: benefits and risks

In late October, new 20 and 50 som banknotes of the 2026 series entered circulation in Kyrgyzstan. Their main feature is that, for the first time, the banknotes were manufactured directly within Kyrgyzstan. Against this backdrop, Economist.kg decided to examine the advantages and risks that domestic production of the national currency brings to the country.

Since the introduction of the som in 1993, Kyrgyzstan has not had its own banknote production. The first soms were printed in the UK. In subsequent years, orders were placed with foreign manufacturers in France, Malta, and later the US.

In 2022, the National Bank reported that the national currency was being manufactured by Britain's De La Rue and France's Oberthur Fiduciaire. In 2024, Economist.kg wrote that France's Oberthur Fiduciaire and America's Crane Currency were already being named among the manufacturers.

At the same time, the issue of establishing domestic banknote production was discussed in Kyrgyzstan long before its launch. Back in 2013, Zina Asankozhoeva, who then headed the National Bank, explained that, according to specialists' calculations, such production would be economically unfeasible due to high capital expenditures, the complexity of the technological process, and strict security requirements.

When Kyrgyzstan started printing money

Domestic banknote production was launched for the first time in March 2025. At that time, the production of the national currency began on the basis of Uchkun OJSC. This involved small denomination banknotes.

As Melis Turgunbaev, the head of the National Bank at the time, reported, at the first stage the enterprise was to print small denomination banknotes to replace worn-out currency.

However, the 10 som banknotes printed at Uchkun did not enter circulation. Currently, previously issued 10 som coins remain in circulation.

A year later, in March 2026, President Sadyr Japarov stated that Kyrgyzstan had independently started printing its national currency for the first time.

“For the first time in the history of our country, we have started printing our national currency — the som — ourselves. Previously, we had to order the printing of our national currency in a foreign state and pay money for it. Now everything has changed,” Japarov said at the time.

According to him, Kyrgyzstan received an international certificate confirming that the products comply with global standards. The president also stated that the country had gained the opportunity to fulfill currency printing orders for other states.

In April 2026, the Cabinet of Ministers included the Central Asian Secure Printing Typography LLC in the list of strategic facilities of Kyrgyzstan. The company was registered on October 12, 2023. In 2024, the enterprise was already producing security and offset paper.

In September 2026, this printing house began printing Kyrgyz som banknotes. And on October 27, the National Bank put new 20 and 50 som banknotes of the 2026 series into circulation.

Thus, Kyrgyzstan has gradually transitioned to producing banknotes domestically. Now the question is not only about the technological capability to print soms independently, but also about the economic advantages and risks of such production.

Advantages of domestic production

As economic expert Iskender Sharsheev told Economist.kg, producing banknotes inside Kyrgyzstan can provide the country with several advantages. Among them, he highlights a reduction in dependence on foreign manufacturers, the accumulation of domestic expertise in issuing the national currency, and an additional economic effect.

“Printing money inside the country is a certain experience of operating a mint and creating a multiplier effect. One job at such an enterprise can additionally create up to five to six jobs. That is, it strengthens our own economy,” Sharsheev noted.

According to him, local production also makes it possible to reduce dependence on foreign companies. At the same time, Sharsheev believes that reports regarding the potential use of foreign capacities for economic influence on other countries require careful evaluation.

“Control over the money supply is one of the important advantages of domestic production. In addition, this makes it possible to reduce risks associated with dependence on foreign manufacturers. There is data on cases where, during certain periods, mints located outside the country could be used for economic influence. After changes in the political situation, a large amount of the national currency could be printed there and introduced into the economy through certain agents of influence. This could lead to a sharp rise in inflation and serious economic consequences. Such cases were mentioned in recent history as well. However, since these were special operations, there is little reliable evidence of such episodes — mostly there are isolated signals and reports. Nevertheless, this risk must be taken into account and eliminated whenever possible,” the expert noted.

Risks of domestic banknote production

Speaking about the potential issuance of larger denomination banknotes, the expert specifically touched upon risks for monetary policy. In his opinion, having domestic production capacities should not lead to an uncontrolled increase in the money supply.

“Over the past five to seven years, the money supply has increased by approximately 94 billion som. This has also affected inflationary processes. At the same time, the National Bank and the Ministry of Finance are trying to keep the money supply in a certain balance: on the one hand, preventing its excessive growth, and on the other, ensuring a sufficient volume of money to support economic activity and economic growth rates,” Sharsheev noted.

At the same time, the expert emphasized that inflation is driven not only by monetary factors. Among other causes, he cited rising global prices and the cost of imported goods, energy crises, wars, and geopolitical instability.

As an example, Sharsheev cited Turkey, where, according to him, a soft monetary policy and an increase in the money supply were accompanied by a significant depreciation of the national currency and high inflation.

“The most dangerous driver of inflation is the increase in the money supply. If the National Bank and the Ministry of Finance fail to ensure a sufficient balance, this could accelerate inflation. But excessive restriction of money supply growth can also lead to a decline in business activity and stagnation,” he said.

The expert noted that when managing the money supply, it is necessary to take into account real GDP growth rates, inflation, the purchasing power of the population, the state of production, exports, and other economic indicators.

“This balance must be maintained between the growth of the money supply and the rate of economic development, global inflation and real GDP, real purchasing power and the real economy,” Sharsheev noted.

According to him, domestic banknote production increases the responsibility of the state and the National Bank for the stability of the monetary system.

“When you have your own mint, greater responsibility comes with it. This is the responsibility for preserving economic stability,” Sharsheev emphasized.

Independence with caveats

Thus, Kyrgyzstan has taken the first step toward domestic banknote production, but it is still premature to speak of a full transition to issuing them entirely within the country. Currently, the discussion concerns the first 20 and 50 som banknotes. Larger denominations have not yet been produced domestically.

Domestic production can reduce Kyrgyzstan's dependence on foreign manufacturers, help develop local competencies, and create an additional economic effect. In the future, the scale of production and the list of denominations may expand, but this will depend not only on the technological capabilities of the enterprise, but also on the decisions of the National Bank.

The main question is how the country will use the established production capacities. The ability to print the national currency independently does not mean there is a need to increase its volume. Monetary policy must take into account economic growth rates, inflation, purchasing power, and other indicators.

Domestic banknote production remains an initial stage of technological independence for Kyrgyzstan. It opens up new opportunities, but at the same time requires a responsible approach to organizing the issuance of the national currency and ensuring the stability of the monetary system.