The Central Bank of the Republic of Türkiye (CBRT) has successfully completed phase 1 of its digital Turkish lira (CBDC) and is now gearing up for more widespread pilot tests in advanced phases. Phase 1 involved preliminary tests of strategic technologies and pilot studies at specific locations to measure user experience and system performance, according to a recent evaluation report.
The evaluation report compiled findings and assessments from phase 1, focusing on digital currency transactions, wallet application, and digital identification. The CBRT emphasized the importance of preparing a system that fully meets the requirements and principles of digital currency rather than solely focusing on the technology itself.
The report highlighted CBRT’s efforts in exploring the feasibility and implementation of a CBDC since 2021. The successful execution of the first payment transaction on the digital Turkish lira network in December 2022 marked a significant milestone in the central bank’s digital currency journey.
Turkey’s crypto adoption rate surged from 16% to 40% between 2021 and 2023, as revealed by a Chainalysis research report in September 2023. This highlights the increasing interest and demand for digital assets in the country, further emphasizing the significance of CBRT’s digital lira initiative.
Moving forward, CBRT announced plans to continue research and development activities in subsequent phases. The upcoming phases will delve into conversions between forms of CBDC, smart payments, offline payments, as well as legal and economic dimensions. The expansion of the Digital Turkish Lira Collaboration Platform and pilot tests of different scenarios will be key components of phase 2.
The completion of phase 1 and the transition to phase 2 signify significant progress in CBRT’s journey towards implementing a digital Turkish lira. As Turkey experiences a rapid increase in crypto adoption, the development of a CBDC could offer new opportunities for financial inclusion and digital payment innovation. However, challenges such as ensuring regulatory compliance, cybersecurity, and user adoption remain critical considerations for the successful deployment of a digital currency. Continued collaboration between the central bank, government, and private sector stakeholders will be essential in navigating these challenges and realizing the full potential of the digital Turkish lira.
