First CBDC test was completed by Turkey’s central bank, with more to follow in 2023

The Turkish central bank is moving on with more testing over 2023 after recently making its first payment transactions using a central bank digital currency.

Turkey’s CBDC success

The first experiment of the Central Bank of the Republic of Turkey’s (CBRT) central bank digital currency (CBDC), the Digital Turkish Lira, has been completed. The CBRT has indicated that it intends to carry out more trials through 2023. In a statement issued on December 29 (1), the CBRT claimed that it had completed its “first payment transactions” utilizing the digital lira. In the first quarter of 2023, it stated it would continue to conduct restricted, closed-circuit pilot testing with technology stakeholders before extending it to include the rest of the year, a few financial institutions, and internet firms.

Before revealing more about the following phases of the study, which will further increase participation, it was said that the findings of these tests would be made available to the public through a “complete assessment report.” In a study project titled “Central Bank Digital Turkish Lira Research and Development,” the Turkish central bank first disclosed in September 2021 that it was looking at the advantages of adopting a digital Turkish Lira.

The future of CBDCs

The government stated it had “taken no final decision on issuing the digital Turkish lira” at the time, indicating it had not yet committed to fully digitizing the nation’s money. The CBRT noted in its most recent announcement that it would keep evaluating the usage of distributed Payment ledger technologies and their “integration” with real-time payment systems. Along with its technological needs, it will also give priority to researching the legal elements of the digital Turkish Lira, such as the “economic” and “legal framework” surrounding digital identity. Recently, several nations, notably Kazakhstan and the United Kingdom (2), started testing central bank digital currencies.

The Kazakhstan central bank has advocated the establishment of an internal CBDC as early as 2023 with a staggered rollout over three years, while the Bank of England has opened applications for a proof of concept for a CBDC wallet. In a speech on December 8, assistant governor Brad Jones of the Reserve Bank of Australia (RBA) cautioned that a CBDC might have unintended consequences. It might replace the Australian dollar and cause consumers to shun commercial banks completely.