The Central Bank of the Republic of Turkey (CBRT) has completed its first trial of its central bank digital currency (CBDC), the digital Turkish lira. In a press release on December 29, the central bank stated that, “As part of the first phase of the project, which was conducted under the direction of the [CBRT], the first payment transactions on the digital Turkish lira network were successfully executed.”
Turkey is not the only country considering the launch of its own CBDC – more and more countries are exploring the development of digital fiat currencies. China is taking a pioneering role and recently added more cities to its digital yuan pilot project. Additionally, Hong Kong and mainland China are set to jointly launch the first cross-border digital yuan pilot project.
The National Bank of Ukraine (NBU) presented a design concept for its CBDC, the digital hryvnia or e-hryvnia, at the end of November. Meanwhile, the Reserve Bank of India announced that it would undertake the first pilot project of a retail digital currency on December 1, with four local banks and four major cities participating in the project. The Bank of Japan will start its digital yen pilot project in the spring of 2023 and is reported to have begun a trial involving “private sector consumers and businesses.”
2023 a Key Year for the Digital Turkish Lira
The press release hints at many more developments in store for the CBDC project in the coming year. Specifically, testing of the CBDC will continue throughout 2023. More specifically, the bank will continue to conduct limited, closed-loop pilot tests with technology and finance sector players during Q1 2023, and will then share the results with the public in a “comprehensive evaluation report.”
The press release also notes that the CBRT will “expand the digital Turkish lira collaboration platform to involve selected banks and firms” and “unveil advanced phases of the pilot study (…).” This suggests that further testing will be conducted to determine “architectural configurations” for specific areas, including the use of distributed ledger technologies in payment systems and the integration of these technologies with instant payment systems.
Finally, legal studies have been conducted on the CBDC, which have shown that “digital identification” is essential for the project. The press release adds that, “Accordingly, the identification studies will be deepened in the coming period, and the pilot study will be evaluated with a focus on the identification methods that will be used in the system.”
Overall, it appears that the CBRT is making significant progress in the development of its digital Turkish lira, and that the project will continue to evolve and expand in the coming year. It will be interesting to see how the CBDC is received by the public and the financial sector, and how it may impact the broader Turkish economy.