Developments on Central Bank Digital Currencies (CBDC)
The increasing popularity of cryptocurrencies is leading countries to develop Central Bank Digital Currency (CBDC) in order to avoid tax losses. CBDCs are defined as digital versions of cash issued and regulated by central banks. As of 2023, more than 100 countries around the world have started CBDC research.
Featured Countries
- Currently, only three countries have introduced their own digital currencies: the Bahamas, Jamaica, and Nigeria.
- Among the G20 countries, 11 countries, including Turkey, have entered the pilot phase.
- The European Central Bank (ECB) has set the final use date for the digital euro as 2025.
The country that has made the most progress in the pilot phase is China. The giant economy of Asia is testing the digital yuan in 25 cities and approximately 260 million citizens have yuan in their digital wallets. On the other hand, it is observed that the US is lagging behind in following the developments in digital currency. During the presidential election process, the negative attitudes of some candidates towards digital currency have made the situation even more complicated.
Turkey’s Digital Turkish Lira Project
There are important developments in the Digital Turkish Lira Project launched by the Central Bank of the Republic of Turkey (CBRT) in 2020. While the first payment transaction was carried out in December 2022, the First Phase Evaluation Report was published at the end of 2023. .This first phase focused on issues such as the development of smart contracts, identity integration, digital wallet design and cybersecurity tests. The second phase, which will start in 2024, aims to expand the cooperation platform with new participants.
The Potential of Digital TL
Financial experts state that the digital Turkish Lira can be issued technically without any problems. However, it is emphasized that inflation must be brought under control for this process to be successful. The potential of the digital TL to reduce informality in the tax system is remarkable. Experts predict that there will be a period in which the digital TL and the traditional TL will be in circulation together.
Change is Inevitable in the Financial World
The Global Financial Communications Network (SWIFT) is working on a new platform to adapt to digital currency developments. This new platform will allow the Central Bank Digital Currencies of different countries to be compatible with each other and make international payments faster, more secure and less costly. CBDCs can also make significant contributions to the fight against the informal economy.
Experts are certain that digital currencies will lead to significant changes in the financial world, while they underline that there are question marks regarding privacy, security and financial stability. Therefore, the future of digital currencies will continue to be a subject that needs to be monitored carefully.
