The central bank’s governor noted that Turkey completed the conceptual phase of the project. The Turkish lira has depreciated by more than 20% against the US dollar this year.
Turkey recently joined the central bank digital currency (CBDC) race in the year of the biggest crisis for its national fiat currency, the Turkish lira. The governor of the central financial institution, Naci Ağbal, reported these developments to the local parliament.
In recent days, Ağbal stated that the country’s digital currency project is already well advanced. He also said that they will start a pilot test in the second half of 2021.
“We have currently completed the conceptual phase of this project. Our goal is to start the pilot tests in the second half of 2021,” said the central bank’s representative.
The announcement, and particularly the level of progress on this project that the authority acknowledges, took everyone by surprise. Not even the Bank for International Settlements (BIS) knew that Turkey was planning to create its digital currency, according to its updated database.
This occurs just at the close of a year with a sustained crisis for the local fiat currency, the Turkish lira. A graph shows that the currency has depreciated by about 20% against the US dollar this year.
After starting the year with a ratio of USD 0.16 per Turkish lira, each lira now represents only 0.13 USD. At one point in early November, the ratio reached USD 0.11 per Turkish lira.
Turkey thus joins a long list of countries that are exploring the implementation of their digital currencies, which China leads among the nations with large economies. The Asian country has already conducted several tests with the use of its digital yuan for its citizens’ retail purchases and is in a much more advanced stage than the rest.
The Asian giant is the most advanced among the most powerful nations, but it will not be the first to launch its CBDC. The Bahamas is the only country that has already launched its digital currency, the Sand Dollar, which they integrated into the country’s payment network in October.
Turkey’s Silent Progress towards Its Digital Currency
Turkey had already evaluated the possibility of creating its digital currency in mid-2019, but there were no major advances after those statements. At least, that did not happen publicly, since now it is possible to see that they did continue to develop a project that would come to light before anyone thought.
The Eurasian country is no stranger to the world of cryptocurrencies. A source from the Central Bank of Venezuela revealed that the South American country has been making Bitcoin payments to Turkey.
A mid-2019 survey ranked Turkey as the country with the highest level of adoption worldwide. Besides, they had already created a national research center that focused on exploring the use of blockchain technology the previous year.
No one expected the Turks to be so far advanced and to be ahead of the United States and the European Union itself. The latter are still discussing the possible implications of their digital currencies and do not have a clear schedule for moving forward.
The number of central banks that welcome the possible implementation of digital currencies is growing. Although they are in different stages of discussion, conceptualization, or development, large economies are already working towards the total digitization of their economies.
By Alexander Salazar