Turkey’s Central Bank Releases Report on Digital Turkish Lira Project

The Republic of Turkey's Central Bank Releases English Translation of First Phase Evaluation Report for its Central Bank Digital Currency

Turkey’s First-Phase Digital Lira Project Evaluation Report Released

📅 Published on Feb. 19, 2022

The Central Bank of the Republic of Turkey (CBRT) has recently released an English translation of its report evaluating the first phase of its Central Bank Digital Turkish Lira Research and Development (R&D) Project. This project aims to develop a central bank digital currency (CBDC) for Turkey. The report, which was originally published in Turkish last year, provides valuable insights into the progress and features of the digital Turkish lira. Let’s take a closer look at what this report reveals and address some additional topics that readers might find interesting.

Phase 1: The Building Blocks of the Digital Turkish Lira System

The first phase of the project focused on building the foundation of the digital Turkish lira system. This included the development of the digital identity system, digital currency system, abstraction layer, service layer, and wallet. The abstraction layer plays a crucial role in supporting the modularity of the system, allowing for easy replacement of different components when necessary. 🧱

The CBRT conducted its first trial transactions with the digital Turkish lira in 2022, marking an important milestone in the project’s progress. These transactions demonstrated the functionality and usability of the CBDC. 💸

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Independent Parts, Interoperability, and Complementarity

One of the key strengths of the digital Turkish lira system is that all its parts operate independently from each other, which enables smooth replacement and upgrades. The system operates on the Digital Turkish Lira Collaboration Platform, which is managed by the CBRT in collaboration with the Scientific and Technological Research Council of Türkiye, as well as the Aselsan and Havelsan companies. This collaboration ensures a holistic approach to the development and implementation of the CBDC. 🤝

The digital Turkish lira was designed as an intermediated retail CBDC, with a separate study conducted for wholesale payments. The CBRT emphasizes the importance of interoperability and complementarity, stating that the system should not compete with existing financial products and services but rather support and enhance them. This approach aims to ensure a seamless integration of the CBDC into the existing financial ecosystem. ♻️

Programmable Payments and Self-Sovereign Identity

The CBRT has expressed a preference for programmable payments over programmable money. This means that the system allows for the creation of contract templates with conditions on credentials and payment interfaces. Public institutions and different licensed actors will have opportunities to participate in the development, approval, deployment, presentation, updating, and deactivation of contracts. This approach aims to enable flexibility and customization in the use of the digital Turkish lira. 💡

In addition, self-sovereign identity is a crucial aspect of the privacy provisions in the CBDC. With self-sovereign identity, individuals have full control over their personal information and can choose how and when to share it. This ensures privacy and security in digital transactions, providing users with a sense of empowerment and control over their data. 🔒

Q&A – Exploring Additional Topics of Interest

Q: When will Phase II of the project begin, and what will it focus on?

Phase II of the project will examine smart payments and offline payments. The exact timeline has not been announced. This phase will also delve into legal and economic considerations related to the digital Turkish lira. Furthermore, digital transactions will be included in intermediaries’ mobile apps, adding another layer of convenience and accessibility to the CBDC.

Q: Is Turkey working on cryptocurrency regulation as well?

Yes, Turkey is actively working on creating a regulatory framework for cryptocurrencies. The country’s weak crypto regulation has been a concern, and it is one of the factors keeping Turkey on the Financial Action Task Force’s gray list. Establishing clear and robust regulations will help promote a safe and secure crypto environment in Turkey.

Future Outlook: The Potential of the Digital Turkish Lira

The development of the digital Turkish lira represents a significant step towards a more advanced and efficient financial system in Turkey. By combining the benefits of blockchain technology and digital currencies, the CBDC has the potential to revolutionize payments and financial transactions.

Furthermore, the interoperability and complementarity of the system ensure a smooth integration with existing financial products and services, creating a synergistic environment that benefits both individuals and businesses.

As the project progresses into Phase II, smart payments and offline payments will be explored, further enhancing the versatility and functionality of the CBDC. This ongoing development and expansion of features will shape the future of the digital Turkish lira and position Turkey as a leading player in the digital currency landscape.

🔮 Be on the lookout for more advancements and updates in the coming months, as Turkey continues to embrace the digital revolution in finance!

References: – CBRT Report: Digital Turkish Lira First Phase Evaluation – Turkey mulls addressing licensing and taxation in new crypto rule – Decentralized identity: Proving it’s really you in the 21st Century – Craig Wright accused of industrial-scale forgeries on first day of COPA trial – Hong Kong authorities investigate Worldcoin privacy concerns – Canada can also benefit as US finally gets spot BTC ETF: Coinbase exec

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