Naci Agbal, the top official at the central bank informed the Turkish parliament last week that the state intends to roll out the digital currency pilot project in June 2021.
The official added that the central bank had taken measures by setting up a Directorate-General Financial Innovation which would conduct R&D for the nation’s Digital Currency.
Agbal stated that lately the ideal part of this project was almost done within two months and the project’s steering team will commence the pilot phase in June next year.
Concurrent with the banker’s statement is the further decline of the Turkish currency Lira which has experienced a historic decline since the pandemic. During 2020, Lira has registered around a 23 percent decline compared to the US dollar.
Turks Experts on Digital Currency
Medeni Sungur, the head of Turkey Digital media and Research institute said that the country’s Digitisation policy is impelled by the demand to keep up with other developing nations and discern for high technological advancement. Sungur added that economic and social challenges would be better addressed by going the digital way.
This bold strategy positions Turkey in the lead of several nations that are planning to roll out their Central Bank Digital Currency, although the majority are yet to initiate pilots.
However, Alper Akalin, one of the founders of DEVA, Turkey opposition party argued that the digital currency is an ideal project but would not be sufficient to rescue the weakening lira.
Bitcoin holders see their cryptocurrency as a shield towards central banks as it is decentralized. Akalin said that since CBDC is quite unavailable, Turkey can hence be a matter of preference for the state that firmly regulates the central bank and has resulted in a sharp decline of the currency.
Moreso, Akalin said that the unsatisfactory performance of the state’s monetary and fiscal policy may voluntarily affect the CBDC and therefore may be impinged to absolute governance similar to the state’s unfortunate currency.
According to a Bank of International Settlements report released in January this year, Turkey enters a global race among the countries harnessing the potential of CBDC with over 80 percent of the countries developing the advanced tech.
Many nations have joined the race including the Bahamas, an island country that initiated the “Sand Dollars” this year. Additionally, China CBDC which is in the pilot phase has seen a record-breaking start by transacting over 1 billion yuan in October. Turkey declared a month later it would commence developing the CBDC project.
Turkish citizens are quite familiar with cryptocurrencies and blockchain. While the Turkish economy was affected by the pandemic and inflation increased sharply, the citizens embraced cryptocurrencies as an alternative to guard their investment returns.
Sungur said that digital platforms such as Paypal which embraces Bitcoin are denied jurisdiction in Turkey as their operating license was terminated in 2016. However, Sungur said that Turks pursuing digital advancement such as cryptocurrencies would quite embrace the idea of granting Paypal jurisdiction in the country before hasting to roll the CBDC.