Turkey could finish testing and developing its digital lira as soon as in 2020.
This is according to Turkey’s President Recep Tayyip Erdogan who directed the government to finish the CBDC next year.
Turkey Could Launch Its CBDC In 2020
Turkey could be ready to launch its Central Bank Digital Currency (CBDC) next year. According to a recent report released by Cointelegraph Turkey, the country’s Central Bank is planning to launch a new digital lira.
This is in line with the Presidential Program, a document that specifies how the CBDC should be tested during the next year.
The government wants to develop a platform that would allow individuals and companies to perform instant payments using a digital version of the local fiat currency, the lira (TRY).
At the same time, the central bank is expected to be working with other technology-related agencies and the TUBITAK, the Scientific and Technological Research Council of Turkey.
In this way, the government would be able to strengthen the financial sector by using a local central bank digital currency.
On the matter, the document explains:
“The main objective is to establish a financial sector with a strong institutional structure that can respond to the financing needs of the real sector at a low cost, offer different financial instruments to a wide investor base through reliable institutions and support Istanbul’s goal of becoming an attractive global financial center.”
Stabilizing the Economy
The decision to launch a CBDC comes after a very hard 2018 and a complicated 2019 for the Turkish economy.
The Turkish lira experienced a massive depreciation against the U.S. dollar. During 2018, the TRY lost almost 50% of its value. In 2019, the market stabilized and the TRY gained 16% against the U.S. dollar.
Indeed, the Turkish economy contracted during the second half of 2018 by -1.4% on Q3 and -2.8% on Q4. In 2019, the country was able to once again enter a period of growth that seems to have stabilized at around 1.2% on Q2 2019.
Turkey is not the first country that is working on a Central Bank Digital Currency. There are other jurisdictions that are planning to launch local cryptocurrencies to make their economies more efficient.
China is one of these countries. Although there is not enough information about their plans, the intention is to compete against other private initiatives such as Facebook’s Libra and other stablecoins that could eventually arise in the future.