The Central Bank of the Republic of Turkey (CBRT) has unveiled an English rendition of its report assessing the initial phase of its Central Bank Digital Turkish Lira Research and Development (R&D) initiative aimed at crafting a central bank digital currency (CBDC). While the report was originally published in Turkish last year, the English translation was made available on February 19.
This initial phase of the project encompasses the development of various components, including the digital identity system, digital currency system, abstraction layer, service layer, and wallet. Notably, the abstraction layer is instrumental in facilitating the modularity of the system. The project's inception dates back to 2021, with the CBRT marking a significant milestone by conducting the first trial transaction involving digital Turkish lira in 2022.
Each component within the system is designed to be independent and easily replaceable, contributing to its overall robustness. Operating within the Digital Turkish Lira Collaborative Platform, the system is a collaborative effort involving the CBRT, the Turkish Scientific and Technological Research Council, as well as companies like Aselsan and Havelsan.
The digital Turkish lira is envisaged as an intermediary retail CBDC, with wholesale payments being subject to separate examination. It is emphasized that the system must exhibit a high degree of interoperability and complementarity, without disrupting existing economic and financial processes or posing competition to current financial products and services.
In terms of its operational framework, the CBRT expresses a preference for programmable payments over programmable currencies. This entails the ability to create contract templates based on voucher conditions and payment interfaces, with participation from public entities and licensed actors in various stages of the contract's lifecycle. Additionally, privacy provisions, particularly the concept of self-sovereign identity, are deemed crucial. Moving forward, the second phase of the project will delve into areas such as smart payments and offline transactions, with a focus on legal and economic considerations. While specifics regarding the timeline for Phase 2 remain undisclosed, it is expected to further refine and enhance the digital transaction ecosystem.
