Many countries accelerate their Central Bank Digital Currency (CBDC) efforts to harness the advantages of blockchain technology. Beyond the steps taken by trillion-dollar giants in asset tokenization, governments are moving fiat currencies onto blockchain. What is the current status within Turkey?
Digital Turkish Lira
The Central Bank of the Republic of Turkey has completed the first phase of its CBDC project and shared the details. The Digital Lira, a significant step towards integration into the digital economy, will continue its second phase of work in 2025.
CBDC is vital for a secure digital version of cash beyond physical money. Here, the Central Bank is conducting research to contribute to the economy by increasing efficiency and speed while reducing costs. Throughout the upcoming year, pilot tests will continue, addressing various use cases, contracts, and risks associated with programmable currency.
This process, supported by leading strategic partners like ASELSAN, HAVELSAN, and TÜBİTAK, includes work on digital wallets and identity applications.
CBDC and Risks
The vulnerabilities of physical money, particularly regarding money laundering and tax evasion, are already known. Moreover, in an inflationary environment, we have seen days when the value of coins exceeded their raw material value. People have sold coins to scrap dealers, obtaining larger amounts than their intrinsic value.
Despite the advantages of the Digital Lira, the issue of constant surveillance is perplexing. Following China’s release of its digital yuan, U.S. senators argued that athletes should not use it during competitions in China, stating that continuous surveillance violates privacy.
Countries like the U.S. have reacted strongly against the discomfort associated with “constant surveillance” brought by CBDC. Even Trump promised not to take action regarding CBDC. While programmability of money sounds appealing, the risks of constant monitoring of assets, easy seizure, transfer restrictions, and condition-based expenditure limitations are concerning.
