Turkey’s central bank announced today that it had completed the first set of tests for its long-planned digital currency.
The Central Bank of the Republic of Turkey (CBRT) said that it plans to continue running tests for its digital lira next year.
“The CBRT will continue to run the limited, closed-circuit pilot tests with technology stakeholders in the first quarter of 2023,” the statement read. “Findings obtained from these tests will be shared with the public via a comprehensive evaluation report.”
Upcoming phases will explore “the use of distributed ledger technologies in payment systems and the integration of these technologies with instant payment systems,” the announcement read.
Turkey’s central bank has been working on its own CBDC—a digital version of a state’s fiat currency—for years. CBDCs are digital assets backed by a central bank, and are very different from the likes of Bitcoin and Ethereum. This is because they are centralized: a central power—the government or central bank—controls them.
Bitcoin and many other digital assets are decentralized: no one entity controls them and their ledger of transactions is maintained and checked by a distributed network of validators.
Japan Kicks Off Central Bank Digital Currency Experiment
Japan’s central bank has started planning a central bank digital currency (CBDC) experiment with the country’s major financial players, according to a major newspaper report today. The Bank of Japan is working with three megabanks as well as regional banks in the Asian nation—and next year will trial a digital yen, Nikkei reported Wednesday. If all goes according to plan, the newspaper added, the BOJ may go ahead and release a CBDC in 2026. What Are Central Bank Digital Currencies (CBDCs)? Th...
Countries around the world are in different stages of researching and releasing CBDCs. Last month, news surfaced that Japan’s central bank was planning a CBDC experiment with the country’s megabanks. Meanwhile, the Reserve Bank of India has proposed a phased pilot of its version of a digital rupee.
China is by far the furthest ahead of the major economies: citizens can already spend the digital yuan.
Turkey makes for an interesting case study because the country’s money is one of the worst performing emerging market currencies: this year it lost 29% of its value. Because of this, citizens are interested in digital assets like Bitcoin.
Back in 2020, Ali Babacan, a founding member of DEVA, Turkey’s opposition party, told Decrypt that a digital lira would not solve the country’s economic woes.
Despite many countries around the world being in varying states of progress with CBDCs, privacy advocates have criticized the idea of the assets—claiming they could allow the state to snoop on and control citizens’ spending.
Edward Snowden Talks Governments and Crypto, CBDCs, and Ethereum vs Bitcoin at Camp Ethereal
Edward Snowden gives an extensive interview to Marta Belcher of Filecoin Foundation for Camp Ethereal 2022, taped on February 27. He talks about how governments view crypto as "an evolving threat," how crypto "transforms power relationships," why he thinks Ethereum "suffers from the same privacy problems as Bitcoin," and why he views central bank digital currencies (CBDCs) as "crypto-fascist currencies."
Crypto exchange ShapeShift’s founder Erik Voorhees told Decrypt in February that the assets were an “Orwellian spy surveillance nightmare.”
For its part, Turkish officials say “digital identification is of critical importance for the project.”
