Turkey Advances Central Bank Digital Turkish Lira Project

The Central Bank of the Republic of Türkiye (CBRT) is making significant strides in its endeavor to introduce a digital Turkish lira, complementing the existing payments infrastructure. Recently, the CBRT released a report evaluating the first phase of its Central Bank Digital Turkish Lira Research and Development (R&D) Project, shedding light on the progress made thus far. The project aims to explore the potential features, architectural setups, and technological alternatives for a digital Turkish lira, with the ultimate goal of conducting pilot tests.

Initiated in 2020, the project has progressed through various phases, including proof-of-concept studies and the recent completion of the first phase. Collaborating with leading technology stakeholders such as TÜBİTAK, ASELSAN, and HAVELSAN, the CBRT has established the Digital Turkish Lira Collaboration Platform to facilitate technological research, development, and testing processes.

The digital Turkish lira is envisioned as an intermediated retail central bank digital currency (CBDC), designed to be interoperable, complementary to existing financial processes, and accessible without dependence on any financial intermediary institution. Privacy protection and adaptability to technological innovations are key principles guiding its design.

Phase I of the project focused on developing the necessary technological infrastructure, including a prototype Digital Turkish Lira System, digital identity systems, and digital wallet applications. Pilot tests were successfully conducted, paving the way for further phases of the project.

Phase II will delve into smart payments, offline payments, and considerations regarding legal and economic frameworks. Programmable payments and self-sovereign identity are emphasized, ensuring flexibility and privacy in transactions.

Turkey’s approach to digital currencies aligns with global trends, aiming for a complementary role alongside traditional cash systems. Regulatory frameworks are being developed to ensure the coexistence of conventional banknotes and the digital form of the lira, fostering financial stability and innovation.

Looking ahead, the CBRT will continue its research and development efforts, focusing on scalability, security, interoperability, and compliance with legal requirements. The digital Turkish lira is expected to enhance financial inclusivity, efficiency, and innovation within Turkey’s payments ecosystem.