Yesterday, the Central Bank of the Republic of Turkey (CBRT) announced it signed agreements with several institutions to set up its Digital Turkish Lira Collaboration Platform as part of the next stage of its central bank digital currency (CBDC) research.
All three partner organizations are based in Turkey and deliver services to the Turkish Armed Forces. These are the defense corporation Aselsan, software tech firm Havelsan and government Information Security Research Center, Tubitak Bilgem.
“The technological research, development and testing processes of the Central Bank Digital Turkish Lira R&D Project will be carried out in close collaboration with these technology stakeholders,” stated the announcement.
Though the central bank hasn’t decided on the issuance of a digital Turkish lira, the demand for a CBDC is present.
Currently, 40% of the Turkish population remains unbanked. This may be due to high costs of financial services, travel time to branches, or poor trust in institutions. Cash is particularly favored for daily, low value payments such as newspapers, coffees and bus tickets.
As a digital form of cash, a CBDC would help make cash more accessible and enable the population to participate in Turkey’s e-commerce economy. With more than half its population under the age of 35, a digital currency could prove attractive.
Having already completed proofs of concept, the CBRT now plans to run pilot tests with its technology stakeholders. These will include blockchain technology, distributed ledgers and the integration of CBDCs with instant payment systems.
The central bank expects to publish further results in 2022 after the tests are completed.
Meanwhile, CBDC research is picking up for a number of countries. Last month, Jamaica minted its first batch of CBDC for a pilot, and the Central Bank of Nigeria chose fintech firm Bitt for its eNaira. The Governor of the Reserve Bank of India also recently revealed that it might begin CBDC trials by December of this year.