According to the announcement of Central Bank of The Republic of Turkey (CBRT) on Thursday, the new central bank digital currency (CBDC) has completed the first set of tests. CBRT has successfully tested the first payment transactions on its Digital Lira network, which is an initial step in the testing phase of the currency.
It is stated in the publishing of CBRT:
“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 statement also declared that the upcoming phases will explore “the use of distributed ledger technologies in payment systems and the integration of these technologies with instant payment systems”.
The Turkish presidential strategy and budget directorate also declared in October an annual program for the year 2023 that included the discussion of a CBDC which would be combined with digital identity and FAST, a payment system run by Turkish Central Bank.
What are CBDC?
Central bank digital currencies, CBDC for short, are the centralized version of digital assets, such as Bitcoin and Ethereum. Whereas Bitcoin is a decentralized currency, meaning it is not run by a specific entity or organization. CBDCs are run by a central bank that controls the assets and influences them. Turkey has been working for years to create its own CBDC and it seems its project is close to being released.
Countries globally have been riding the race of creating their own CBDCs, many of them still at the research level. China has always been top of the game in the cryptocurrency complex. The country has already released a digital yuan and launched its first national NFT marketplace.
Other Countries’ Studies on CBDC
The Central Bank of Japan was rumored to be planning a CBDC trial with the nation’s megabanks last month. In addition to Japan, a phased pilot of the Reserve Bank of India’s proposed digital rupee has been proposed in the meanwhile as well.
Whether digital currency adoption will be of help to Turkey’s economic problems is up for discussion. The country has faced a severe devaluation of its currency, Turkish Lira, losing 29% of its value this year alone. This has pushed citizens closer to digital assets, such as Bitcoin, but the opposition party has doubts about the impact of the digital Lira in the face of these economic troubles.