The digital Turkish Lira, which came to the fore in 2021 due to the instability concerns that cryptocurrencies and stablecoins may cause competing with traditional payment systems, is expected to be adapted to real life after the R&D phase is completed. The first test was successfully carried out on New Year’s Eve.
So, what kind of innovations will the digital Turkish lira bring to financial life?
Attorney Abide Gülel and Ahmet Vefa Gündüz, co-founder of crypto assets education and consultancy platform Lexcio, gave the following information about the features of the Central Bank digital currency (CBDC) and its difference from other digital currencies:
WHAT IS THE CENTRAL BANK DIGITAL CURRENCY?
“Central Bank Digital Currency is a digital currency produced by the Central Bank of the Republic of Turkey (CBRT). The purpose of this currency is to facilitate and accelerate transactions between institutions and organizations in Turkey. The Central Bank Digital Currency can also be thought of as a digital version of the Turkish Lira and is provided to users through a service provided by the CBRT.
Central Bank Digital Currency is used through digital wallets. These wallets are an essential tool for users to store and transact digital currencies. Digital wallets allow users to access and transact digital currencies.
ADVANTAGES OF THE DIGITAL TURKISH LIRA
According to the periodic reports of the Interbank Card Center (BKM), while the total number of credit card holders in Turkey was 58 million 215 thousand 318 in 2015, this number increased to 93 million 832 thousand 954 in 2022.
While 324 million 392 thousand 63 payments were made in online card payment transactions in 2015, a total of 1 billion 302 million 794 thousand 158 payments were made in the first eight months of 2022.
The rapid spread of payments in the digital environment is the main reason for states to carry out studies in this area.
Benefits of the Digital Turkish Lira:
• Monetary transactions are carried out in digital environment, without time and place limits, via the internet and with the rule of 24/7.
• Money movements are open to the supervision and control of regulatory and supervisory institutions.
• Since CBDC is produced digitally in a virtual environment, its production cost is zero. It significantly increases the seigniorage income of the state.
• Since all these transactions in the CBDC system will be easy and cheap in the digital environment, the transaction costs arising from transactions such as storing money, delivering it to banks, keeping it in banks, withdrawing it from banks, and transporting it may tend to zero.
• Thanks to the Central Bank’s Digital Turkish Lira, the records of transactions between institutions and organizations in Turkey can be kept more easily and problems that may arise during the execution of transactions can be prevented.
FIRST PAYMENT SUCCESSFULLY MADE
The Central Bank of the Republic of Turkey announced that they successfully completed the first payment transactions on the digital Turkish lira network on 29.12.2022.
The CBRT added that it will continue the pilot application tests in the first quarter of 2023 and that the results obtained as a result of the tests will be shared with the public. It has also been reported that the Digital Turkish Lira Cooperation Platform will be expanded in 2023 with the participation of selected banks and financial technology companies.