Turkey Advances Digital Currency Plans with Testing of Digital Lira
The Central Bank of Turkey announced that it has finished the initial round of testing for its digital currency and plans to continue testing the digital lira in the coming year.
“The CBRT will continue to run the limited, closed-circuit pilot tests with technology stakeholders in the first quarter of 2023,” the statement read. “Findings obtained from these tests will be shared with the public via a comprehensive evaluation report.”
The future stages of testing will focus on using distributed ledger technology in payment systems and integrating this technology with instant payment systems, according to the announcement.
The Central Bank of Turkey has been developing its own Central Bank Digital Currency (CBDC), which is a digital form of the country’s official currency, for a number of years.
CBDCs are digital assets that are issued and backed by a central bank, unlike cryptocurrencies like Bitcoin and Ethereum which are decentralized and not controlled by any single authority. CBDCs are centrally controlled by the government or central bank.
Various countries are at various stages of researching and launching CBDCs. Recently, it was reported that Japan’s central bank is considering conducting a CBDC experiment with major banks in the country. Additionally, the Reserve Bank of India has proposed a phased pilot of its own digital rupee.
However, China is the most advanced among major economies in terms of its digital currency, as citizens can already use the digital yuan for transactions.
It is important to note that Turkey’s economy and currency have faced challenges, with the lira losing 29% of its value this year. In response to these economic issues, some Turkish citizens have shown interest in digital assets like Bitcoin. However, Ali Babacan, a founding member of DEVA, a Turkish opposition party, previously stated that a digital lira would not be a solution to the country’s economic problems.
While several countries are at different stages of developing CBDCs, privacy advocates have raised concerns about the potential for these assets to enable governments to monitor and control citizens’ spending habits.
Erik Voorhees, the founder of cryptocurrency exchange ShapeShift, has described CBDCs as an “Orwellian spy surveillance nightmare.”
Meanwhile, Turkish officials have emphasized the importance of digital identification for the CBDC project.
