Turkey’s Central Bank Completes First CBDC Test with More to Come

The national bank authority claimed in a statement made to the CBRT on December 29 that it successfully carried out its “first installment exchanges” using the upgraded Lira.

In the first quarter of 2023, it will continue to conduct limited, closed-circuit pilot testing with innovation partners before expanding them to select banks and monetary innovation groups for the remainder of the year. Before disclosing more about the subsequent phases of the evaluation, which will also widen cooperation, it was stated that the results of these tests will be communicated to the general public through a “far-reaching assessment report.”

The national bank of Turkey earlier stated that it was looking into the benefits of introducing a computerized Turkish Lira in September 2021 through an investigation project dubbed “National Bank Computerized Turkish Lira Innovative work.” At that time, the government vowed to completely digitize the currency of the country, noting that it had “decided on no last choice to the issuance of the computerized Turkish lira.

The CBRT stated in its most recent announcement that it will continue to examine the use of suitable record enhancements in installment frameworks and their “reconciliation” with moment installment frameworks. It will also concentrate on the legal aspects of the modern Turkish Lira, such as the “financial” and “legal structure” surrounding computerized ID, in addition to its technical requirements.

The Turkish central bank is moving on with additional tests over 2023 after recently making its first payment transactions using a central bank digital currency. The Digital Turkish Lira, the first trial of the Central Bank of the Republic of Turkey’s (CBRT) central bank digital currency (CBDC), has been completed, and the CBRT has designated that it plans to carry out more trials through 2023. On December 29, in a statement issued, the CBRT stated that it had successfully carried out its first financial dealings utilizing the digital lira.

In the first quartile of 2023, it said it will continue to conduct limited, closed-circuit pilot tests with technology partners before broadening it to include financial technology companies and a few banks in the second half of the year. However, before revealing more about the succeeding phases of the study, which will further increase the contribution, it was said that the results of these tests will be made available to the public through a complete estimation report.

In a study project titled central bank Digital Turkish Lira Research and Development, the Turkish central bank first released in September 2021 that it was looking at the perks of adopting a digital Turkish Lira. At the time, the government said it had taken no final decision regarding the issuance of the digital Turkish lira, indicating it had not committed to fully digitizing the nation’s currency. As per the CBRT’s most recent announcement, it will keep analyzing the use of distributed ledger technologies in payment systems and how well they combine with existing immediate payment systems.

The legal features of the digital Turkish Lira, such as the “economic” and “legal framework” surrounding digital identity, will be studied with equal priority to the system’s technical requirements. Central bank digital currencies are now being tested in several nations, including Kazakhstan and the United Kingdom. The Bank of England has invited bids for a proof-of-concept CBDC wallet, and the central bank of Kazakhstan has suggested introducing an internal CBDC as early as 2023 with a gradual rollout over three years.

Brad Jones, assistant governor of the Reserve Bank of Australia (RBA), cautioned in a speech on December 8 that a CBDC could displace the Australian dollar and cause people to completely avoid commercial banks. The Reserve Bank of Australia (RBA) recently conveyed tentativeness about its own CBDC plans.

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