Turkey’s central bank has completed the first pilot phase of its long-planned digital currency, the digital Turkish lira, and plans to continue running tests in 2023.
According to a statement released last week, the CBRT has successfully carried out the first payment transactions on its central bank digital currency (CBDC) network as part of an initial test phase.
“In the first quarter of 2023, the CBRT will continue its small-scale, closed-loop application pilot tests conducted with technological stakeholders. The test results will be made public in a comprehensive evaluation report,” the bank said in the statement.
In 2023, the digital Turkish lira will move to advanced stages where the central bank will conduct pilot tests with broad participation, including banks and financial technology companies, the CBRT added.
“Studies on the legal dimension of the digital Turkish lira show that digital identification is of vital importance for the project. Therefore, studies on the technological requirements and the economic and legal framework of the digital Turkish lira will be prioritized throughout 2023,” the bank stated.
Turkey revealed its intentions to explore a CBDC in 2019, after it was mentioned in President Recep Tayyip Erdogan’s Annual Presidential Program.
CBDCs are the digital form of fiat money, giving holders a direct claim on the central bank and allowing them to make instant electronic payments. CBDCs differ from digital money like cryptocurrencies, which are private and decentralized.
The rise of CBDCs
With the growing popularity of Bitcoin and the distributed ledger technology (DLT) that underpins cryptocurrencies, central banks around the world have been researching the concept and design of digital currencies for several years.
According to the Bank of International Settlements (BIS), 80 percent of central banks around the world are engaging in research, experimentation or development of CBDCs, with 40 percent already testing pilot programs.
China’s digital yuan is at the most advanced stage of any CBDC to date, with citizens already able to use it for transactions.
Over a year ago, Nigeria launched Africa's first digital currency, the e-Naira.
Meanwhile, the Bank of England has opened applications for a proof of concept for a CBDC wallet, while the Kazakhstan central bank has recommended the introduction of an in-house CBDC as early as 2023 with a phased implementation over three years.
In November, Japan’s central bank said it was planning a CBDC experiment with the country’s megabanks. The Reserve Bank of India has proposed a phased pilot of its version of a digital rupee.
The US announced a series of private sector-led pilot programs in 2021.
The Reserve Bank of Australia recently expressed hesitation about its own CBDC plans, with assistant governor Brad Jones warning in a December speech that a CBDC could displace the Australian dollar and lead to people avoiding commercial banks entirely.
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