Turkey's Central Bank Unveils English Report on Phase I of Digital Turkish Lira R&D Project
Summary:
The Central Bank of Turkey (CBRT) has unveiled the English translation of its report on the first phase of its Central Bank Digital Turkish Lira R&D Project. Commenced in 2021, the project aims to develop a central bank digital currency (CBDC) with the independent components for easy replacement. The digital Turkish lira serves as an intermediated retail CBDC, promising high interoperability without disrupting existing economic and financial systems. The second phase will study smart and offline payments besides legal and financial aspects, with a focus on app-based digital transactions. Amidst these advancements, Turkey is also working on a comprehensive regulatory framework for cryptocurrency.
The Turkey's Central Bank, commonly known as CBRT, recently unveiled an English version of its assessment report regarding Phase I of the Central Bank Digital Turkish Lira Research & Development (R&D) Project. Aimed at the creation of a central bank digital currency (CBDC), the report was initially released in Turkish last year and surfaced in English on February 19th.
The inaugural phase of this ambitious project delved into aspects like digital identity and currency systems, abstraction and service layers, and also the digital wallet. Emphasizing system modularity, the abstraction layer proved instrumental. It was in 2021 when the project initially kicked off, with CBRT successfully conducting its first test transactions using the digital Turkish lira the next year.
Every component of the system operates independently of the others, leaving room for effortless replacements. Run by CBRT, the Digital Turkish Lira Collaboration Platform acts as the system's core, in conjunction with the Scientific and Technological Research Council of Türkiye and companies Aselsan and Havelsan.
The digital Turkish lira was thoughtfully created to act as an intermediated retail CBDC, with wholesale payments being explored in a different procedure. The Turkish CBDC ensures promising interoperability and complementarity, without upsetting economic and financial processes or competing with already existing financial products and services.
Favoring programmable payments over programmable currency, CBRT asserts that contract templates can be drafted with condition-laden credentials and payment interfaces. It was stated that public institutions and various licensed entities would be eligible for participation in the procedure of contract development, approval, deployment, display, updating, and deactivation. Privacy provisions heavily rely on self-sovereign identity.
Furthermore, the report reveals that Phase II of the project will investigate smart and offline payments, though the offline payment protocol is yet to be selected. Legal and financial aspects alongside digital transactions will also be under focus, with no specified timeline for Phase II. App-based digital transactions will make the intermediation process simpler.
Simultaneously, Turkey is making strides towards establishing a comprehensive regulatory framework for cryptocurrency, with its deficient cryptocurrency regulation cited as the reason for its continued presence on the Financial Action Task Force's (FATF) gray list.
Published At
2/21/2024 12:25:33 AM
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