Global: Turkish Central Bank Tests Digital Lira

The Central Bank of Turkey has tested a digital lira.

Like many central banks around the world, the central bank of Turkey (CBT) is exploring if and how it could issue a central bank digital currency (CBDC) as part of the digital lira project.

In the project’s latest development, on Thursday (December 29, 2022) the CBT announced that it has successfully tested the first transactions on the digital lira network.

It added that it will continue piloting the digital lira system in the first quarter of 2023 alongside key stakeholders. Findings will be shared via an evaluation report, the CBT said in a press release.

Throughout the year, the CBT intends to expand the digital lira experimentation platform to involve a select group of banks and financial technology companies and to run further technical tests on the system.

As previously reported, the CBT has signed agreements with the technology firms Havelsan, Aselsan and Tubitak-Bilgem, which have been researching, developing and testing the digital lira.

And Turkey isn’t alone in ramping up its CBDC investigation. In fact, central banks in 114 countrieshave undertaken some form of investigation into digital currencies during the past year.

Nevertheless, these moves have not yet been matched with widespread acceptance among consumers.

On Wednesday (December 28, 2022), an ex-official of the People’s Bank of China said that consumers have shown little interest in the digital yuan during its two-year trial,

“The cumulative circulation of the digital yuan in the two years of the trial has been only 100 billion yuan ($14 billion),” Xie Ping told a conference at Tsinghua University, adding that “usage has been low, highly inactive.”

The CBT’s interest in a CBDC comes as Turkish authorities have indicated that they will crack down on cryptocurrencies following a surge in interest as Turkish consumers have looked to hedge against rising inflation.

In September 2021, a U.S. dollar was worth around 8 Turkish lira, yet on Thursday, the exchange rate was sitting at nearly 19 lira per dollar.