The Central Bank of the Republic of Turkey (CBRT) has successfully tested the first transactions using the digital Turkish Lira.
The first payment transactions on the Digital Turkish Lira Network were completed under the CBRT’s leadership. The central bank plans to run further limited, closed-circuit pilot tests with technology stakeholders during 2023’s first quarter. All findings are then to be shared with the public via a final evaluation report.
2023 will also see the CBRT select a range of banks and fintech companies to participate in new tests on the Digital Turkish Lira Collaboration Platform.
As has already been revealed by the studies on the legal implication of the digital Turkish Lira, digital identification is hugely important to the project as a whole. Turkey’s central bank looks to prioritise further studies on the economic and legal framework of the digital currency. The technological requirements are also to be analysed extensively throughout the upcoming year.
The CBRT plans to unveil advanced phases of pilot studies to widen participation. The bank looks to continue to run tests for authentic architectural setups. Testing will cover the use of distributed ledger technologies in payment systems and the integration of such technologies with instant payment systems.
The Digital Turkish Lira
October 2022 saw Turkey publish its 2023 budget. The budget included a section dedicated to researching a new central bank digital currency (CBDC) and outlined plans for tests such as those that have now been completed.
Plans for a new CBDC to be integrated with digital identity and FAST systems were also outlined in the budget. It is clear from this and CBRT’s most recent release that digital identity is of utmost importance to the launch of a Turkish CBDC.
Turkey’s Instant and Continuous Transfer of Funds (FAST) system is an immediate payment system. FAST enables customers to send payment orders at any time via system participants. The FAST system itself is still relatively new, launching in December 2020, when only bank employees could send payments. January 2021 saw the system put into service for all customers.
February 2022 saw the central bank announce the success of the system since its launch:
“Through the FAST System, which allows 24/7 instant transfer of funds, an average of 3.5 million payments are processed per day and transfers are completed in less than a second between customer accounts.”
The success of FAST appears to have enabled the central bank to continue efforts to further progress its digital economy. Tests for the new CBDC look positive, although it could be a long time before Turkey sees one become operational.