Turkey Completes First CBDC Transactions

January 5, 2023
The Central Bank of the Republic of Turkey has run its first test transactions on the digital lira network, promising a report on progress so far.

The Central Bank of the Republic of Turkey (CBRT) has run its first test transactions on the digital lira network, promising a report on progress so far.

Payment transactions using the Digital Turkish Lira Network have been executed successfully, according to the CBRT.

The CBRT has also said that it will continue to run limited, closed-circuit pilot tests with technology stakeholders in the first quarter of 2023.

Findings that are obtained from these tests will be shared with the public via a comprehensive evaluation report.

The CBRT confirmed that it will expand the Digital Turkish Lira Collaboration Platform in 2023 to involve selected financial institutions and technology companies. Meanwhile, it will unveil advanced phases of the pilot study that will further widen the participation.

The CBRT has said that, against this backdrop, it will continue to run tests for authentic architectural set-ups designed in areas such as the use of distributed ledger technologies (DLT) in payment systems and the integration of these technologies with instant payment systems.

Studies on the legal aspects of the digital Turkish lira demonstrate that digital identification is of critical importance for the project.

Therefore, studies on the economic and legal framework of the digital Turkish lira, as well as its technological requirements, will be prioritised throughout this year, the central bank said.

Turkey was a relative latecomer to the central bank digital currency (CBDC) phenomenon, but could quickly catch up with other jurisdictions that are further ahead, such as China and Jamaica, especially if it is able to keep to government targets.

The latest tests were announced in October, as part of the country’s 2023 budget, which allocated CBDC-related funds to the country’s Treasury, as well as the CBRT.

Alongside commitments to carry out payments trials, the budget includes provision for the integration of digital Turkish lira systems with digital identity and the country’s Instant and Continuous Transfer of Funds (FAST) systems as within the scope of research and development to be completed.

Meanwhile, the government has committed to research, development and testing activities that will be carried out with banks as part of its study into wholesale digital currency use.

Although there appears to be political enthusiasm for a CBDC in the Eurasian country, it was one of the first to crack down on crypto-assets.

In June 2021, the CBRT issued a regulation that prohibited the use of crypto-assets for payments. The central bank said that this was due to the lack of a regulatory framework, as well as security risks.

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