• Turkey’s Central Bank of the Republic (CBRT) recently announced the successful completion of its first digital lira transactions.
• The digital lira is a central bank digital currency (CBDC) and appears to involve blockchain technology.
• The CBRT will continue to test the digital lira and share the results of those tests in early 2023.
The Central Bank of the Republic of Turkey (CBRT) recently announced the successful completion of the first transactions involving its digital lira. The CBRT will continue to run limited, closed-circuit pilot tests for the digital lira throughout the first quarter of 2023, and results will be shared with the public in a comprehensive evaluation report.
The digital lira is a central bank digital currency (CBDC) and appears to involve blockchain technology. In September, the CBRT stated that the digital lira could be diversified “into areas such as blockchain technology [and] the use of distributed ledgers in payment systems.” Additionally, in October, the CBRT announced that it would create a “blockchain-based digital central bank money”, which explicitly confirms that the digital lira relies on blockchain technology in some form. The digital lira will also be integrated with non-blockchain services, such as digital identity tools and Turkey’s Instant and Continuous Transfer of Funds (FAST) System.
The CBRT’s decision to launch a CBDC comes as part of the country’s larger economic transformation, which has included the country’s adoption of digital payment systems. In recent years, Turkey has seen a sharp rise in the number of electronic payments, with the country’s central bank noting that the number of payments made via electronic means rose from 3.3 billion in 2016 to 8.3 billion in 2020. This rapid rise in digital payments has led the CBRT to recognize the need for a digital lira, which can serve as a more efficient and secure means of making payments.
The CBRT’s launch of a CBDC is also part of its larger efforts to increase financial inclusion in the country. By providing a digital currency, the CBRT will be able to reach more people and businesses, allowing them to access financial services that may have previously been out of reach. This is especially important in Turkey, where the country’s World Bank ranking in terms of financial inclusion is only 50th out of the world’s economies.
The CBRT’s launch of a digital lira is an important step in the country’s continued economic transformation. The digital lira will allow more people to access financial services and will provide a more efficient and secure payment system. The CBRT will continue to run tests for the digital lira throughout the first quarter of 2023 and will share the results of those tests in a comprehensive evaluation report.