The crypto currency market had a rough 2022. Despite this, many in the industry have started using cryptography and blockchain because there is now enough evidence to prove its effectiveness.
The Turkish government is one of many that has seen the value in this program. The initial phase of testing of the Turkish digital Lira, overseen by the Central Bank of the Republic of Turkey(CBRT), is now complete.
The first CBDC, the Digital Turkish Lira, has been completed (1) by the Central Bank of the Republic of Turkey (CBRT). On December 29, the CBRT said it conducted its "first payment transactions" using digital Lira.
In the first three months of 2023, the CRBT plans to continue undertaking closed-circuit testing with technological companies. When this is finished, the Turkish Central Bank will allow select banks and financial technology companies to participate for the rest of the year.
The findings of these evaluations would be made public via a "comprehensive assessment report" before describing the next steps of the research, which would further increase participation.
Research on the digital Turkish Lira's legal implications has revealed the critical relevance of digital identity to the venture's success. As a result, throughout 2023, research will concentrate on the digital Turkish Lira's technological prerequisites and economic and regulatory framework.
In contrast to crypto currencies like Bitcoin and Ethereum, CBDCs are digital assets guaranteed by a central bank. That's because they're all subject to the will of a single boss, be it the government or the bank.
No single body controls Bitcoin or any other decentralized digital asset; rather, a distributed system of validators maintains and verifies the asset's transaction ledgers.
The CBDC Plan of Turkey
According to a report published (2) in September 2021 under the working title "Central Bank Digital Turkish Lira Research and Development," the Turkish central bank was looking into the potential advantages of switching to a digital Turkish Lira at the time.
When asked about digitizing Turkey's money, the government gave no firm commitment at the time. Furthermore, the Turkish government has declared that still there is no final decision on issuance of the digital Turkish lira.
In another statement, the CBRT said it would keep looking into the potential benefits of distributed ledger technology for financial transactions and their "integration" into existing payment infrastructure.
The CBRT also plans to prioritize the study of the "economic and legal framework" of digital identity and other legal concerns related to the digital Turkish Lira. Furthermore, it has technological requirements.
The Turkish Presidential Strategy & Budget Directorate presented its yearly agenda for 2023 in October, including research into a CBDC linked to digital identification and FAST. The payment system, it has been reported, will be managed by the Turkish central bank.
Global Trend of CBDC Adoption
There is a wide range of progress in studying and releasing CBDCs among nations. In the past month, speculation has circulated that the Bank of Japan is considering a CBDC trial with the country's megabanks.
Many countries are now exploring using central bank-issued digital currencies, including the United Kingdom and Kazakhstan. China is the most advanced of the major economies, with its citizens able to spend digital yuan.
The Bank of England has started taking submissions for a CBDC wallet proof of concept. Meanwhile, the Kazakhstani central bank has proposed implementing a domestic CBDC by 2023, with a phased introduction over the following three years.
Assistant governor Brad Jones warned in a speech on December 8 that a CBDC may replace the Australian currency and drive people to leave commercial banks entirely, suggesting that the Reserve Bank of Australia (RBA) is hesitant over its own CBDC plans.
With a 29% decline in value this year, the Turkish Lira has been one of the worst-performing currencies in the emerging market. This explains why Bitcoin and other crypto assets are gaining popularity.
Despite the progress that many countries worldwide have made with CBDCs, the concept has been criticized by privacy groups. They fear this will allow the government to keep tabs on citizens' spending and regulate it accordingly.