The crypto industry had a difficult year in 2022. Cryptography and blockchain technology have nonetheless been embraced by several industry participants due to their benefits.
One nation that has recognized the benefits of this emerging technology is Turkey. The Central Bank of the Republic of Turkey (CBRT) completes the first tests of the Turkish Digital Lira.
The Central Bank of the Republic of Turkey (CBRT) is considering introducing a Central Bank Digital Currency (CBDC) as part of the Digital Lira Project, like many central banks worldwide.
As part of the project’s latest development, CBRT announced that it had successfully tested the first transactions on its Digital Lira Network.
In the first quarter of 2023, the Central Bank of the Republic of Turkey will continue to conduct closed-circuit testing with technology players.
This program will be expanded by the Turkish Central Bank to select banks and financial technology businesses for the remainder of the year after this phase has been completed. According to a press release from the CBRT, findings will be shared in an evaluation report.
A study of the legal dimension of the digital Turkish Lira shows that digital identity is key to the project’s success. Throughout 2023, we will prioritize research into the technical requirements and the economic and legal framework for the digital Turkish Lira.The Central Bank of the Republic of Turkey
In contrast to cryptocurrencies such as Bitcoin and Ethereum, CBDCs are digital assets backed by a central bank. Governments and central banks have central control over them because they are governed by central authorities.
PYMNTS previously reported that the CBRT had signed a research, development, and testing agreement with Havelsan, Aselsan, and Tubitak-Bilgem, which has been researching, developing and testing the digital lira.
It isn’t just Turkey that is ramping up the CBDC investigation. During the past year, central banks in 114 countries have investigated digital currencies in some form.
These movements have, however, yet to be embraced by consumers widely. Consumers have shown little interest in the digital yuan during its two-year trial, according to an ex-official of the People’s Bank of China on Wednesday (Dec. 28), “The total circulation of the digital yuan in the two years of the trial has been only 100 billion yuan ($14 billion”), Xie Ping told a conference at Tsinghua University, adding that “usage has been low, highly inactive.”
Turkey’s central bank announced in September 2021 that it was exploring the benefits of introducing a digital Turkish Lira in a study called “Central Bank Digital Turkish Lira Research and Development.”
The digitization of the country’s currency was not committed at the time by the Turkish government. Further, the Turkish government stated that it had yet to decide to issue the digital Turkish Lira.
CBRT said the bank would continue to explore the use of distributed ledger technology in payment systems and how it might be incorporated into immediate payment systems.
In October, the Turkish Presidential Strategy and Budget Directorate submitted its annual program for 2023, which included consideration of a CBDC related to digital identity. Several reports indicate that the Turkish central bank will oversee the payment system.
Following a surge in interest in cryptocurrencies as Turkish consumers sought to hedge against rising inflation, the CBRT is exploring a CBDC as the Turkish government has indicated it will crack down on cryptocurrencies.