The Central Bank of Türkiye Prepares for Advanced Phases of Its Digital Turkish Lira: What You Need to Know

The initial testing phase of the digital Turkish lira included strategic technologies, according to the Central Bank of Turkey.

Turkish Central Bank releases initial report on evaluating its digital currency.

📅 Last updated: February 21, 2024
⏱️ Reading time: 1 min

Sujha Sundararajan

Source: Engin Akyurt / Pixabay

The Central Bank of the Republic of Türkiye (CBRT) has completed phase 1 of its digital Turkish lira and now plans to move on to more advanced pilot tests. This development comes after recent evaluations and strategic technology tests carried out by the bank.

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The evaluation report, which can be found here, outlines the CBRT’s preparations for all aspects of the circulation of the central bank digital currency (CBDC). The initial phase involved tests conducted at specific locations to assess user experience and system performance.

According to the report, the focus of the digital Turkish lira is on creating a system that fully meets the requirements and principles of digital currency, rather than just the technology itself. The report also highlights the CBRT’s efforts since 2021 to explore the feasibility and implementation of a CBDC. In December 2022, the central bank successfully executed the first payment transaction on the digital Turkish lira network.

In a Chainalysis research conducted in September 2023, it was discovered that Turkey’s crypto adoption rate had skyrocketed from 16% to 40%.

What’s Next: Phase 2 of the Digital Turkish Lira

The CBRT has stated that it will continue with research and development activities in the upcoming phases. These subsequent phases will focus on exploring conversions between forms of CBDC, smart payments, offline payments, as well as legal and economic dimensions.

As of now, the CBRT is still finalizing the architecture and design of the digital lira. The bank is considering various design options and evaluating whether they meet the necessary economic, legal, and fiscal requirements for a CBDC. Once these assessments are complete, a decision will be made regarding the circulation of the digital Turkish lira.

Source: Digital Turkish Lira – First Phase Evaluation Report 2023

Q&A: Answering Your Burning Questions About the Digital Turkish Lira

Q: What are the advantages of a digital currency like the Turkish lira?

A: The digital Turkish lira offers numerous benefits, including increased efficiency in transactions, reduced costs associated with physical currency distribution and storage, enhanced security features, and greater financial inclusion by providing access to banking services for the unbanked and underbanked populations.

Q: Will the digital Turkish lira replace physical cash?

A: While the CBRT is exploring the implementation of a central bank digital currency, it is unlikely to completely replace physical cash. The aim is to provide an additional digital payment option alongside traditional currencies.

Q: How will the digital Turkish lira impact the economy?

A: The introduction of a digital Turkish lira can potentially streamline financial transactions, reduce transaction costs, and improve transparency in the economy. It may also facilitate greater adoption of digital payment solutions and drive innovation in financial services.

Q: What measures will be taken to ensure the security of the digital Turkish lira?

A: The CBRT is committed to implementing robust security measures to protect the digital Turkish lira. This may include encryption technology, multi-factor authentication, and continuous monitoring of transactions to detect and prevent fraud.

Looking Ahead: The Future of the Digital Turkish Lira

Based on the progress made by the CBRT so far, the future looks promising for the digital Turkish lira. As the central bank continues to move forward with its research and development, we can expect to see further advancements in the functionality and usability of the digital currency.

The increased adoption of cryptocurrencies in Turkey, as indicated by the Chainalysis research, also suggests a growing interest in digital currencies among the population. This presents an opportunity for the CBRT to capitalize on this trend and provide a secure and regulated digital payment solution.

In conclusion, the digital Turkish lira is well on its way to becoming a significant player in the digital currency landscape. With the CBRT’s commitment to thorough evaluations and strategic testing, we can anticipate a successful rollout of the digital currency in the near future.

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References:

1. Evaluation Report – Digital Turkish Lira First Phase
2. Chainalysis Research

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