Concerning the bank
Turkey’s central bank is the Central Bank of the Republic of Turkey (CBRT). Its functions include executing monetary and exchange rate policy, managing Turkey’s international reserves, producing and issuing banknotes, and developing, maintaining, and regulating the country’s payment networks. The CBRT is mandated by law to achieve and maintain price and financial stability in Turkey, and has the authority to utilise any policy tool at its disposal to achieve these goals. As a result, it possesses instrument independence but not goal independence. Since 2006, the CBRT has been operating under a full-fledged inflation targeting system.
The CBRT is a public firm. Its 25.000 Turkish lira capital is split into 250.000 shares. According to Turkish Central Bank Law, these shares are classified into four types:
- The Turkish Ministry of Finance and Treasury is the only owner of Class A shares.
- Class B shares are given to Turkish national banks.
- Class C shares are issued to banks that are neither national banks or privileged enterprises.
- Turkish business institutions, as well as real and legal people of Turkish nationality, are allotted Class D shares.
Class A shares formed 55.12% of CBRT’s capital as of the end of 2018, while class B, C, and D shares constituted 25.74%, 0.02%, and 19.12%, respectively.
Following the completion of its first payment transactions using a central bank digital currency, the Turkish central bank is planning more testing for 2023. The Central Bank of the Republic of Turkey (CBRT) has completed the first testing of the Digital Turkish Lira, the central bank digital currency (CBDC). It has stated that testing will take place till 2023.
According to a CBRT announcement issued on December 29, the central bank authority successfully completed its “first payment transactions” utilising the digital lira. It stated that it will continue to conduct restricted, closed-circuit pilot testing with technology stakeholders in the first quarter of 2023 before expanding it to include chosen stakeholders and the remainder of the year will be dominated by financial technology firms.
It stated that the findings of these tests would be shared with the public via a “complete assessment report” before revealing more about the following phases of the project, which will broaden involvement even more. In September 2021, the bank stated that it will investigate the viability of creating a digital Turkish Lira as part of a research initiative called Central Bank Digital Turkish Lira Research and Development.
At the time, the government made no commitment to eventual currency digitalization, claiming that it had “taken no final decision regarding the launch of the digital Turkish lira.” In its most recent release, the CBRT announced that it will continue to assess the use of distributed ledger technology in payment systems as well as its “integration” with instant payment systems.
It will also prioritise researching legal elements of the digital Turkish Lira, such as the “economic” and “legal framework” surrounding digital identity, as well as its technological needs. Several nations, notably the United Kingdom and Kazakhstan, have lately began testing digital currencies issued by central banks.
The Bank of England has asked for suggestions for a proof of concept for a CBDC wallet, while Kazakhstan’s central bank has proposed launching an in-house CBDC as early as 2023, with a three-year phase-in.
The Reserve Bank of Australia (RBA) recently expressed concern about its own CBDC plans, with assistant governor Brad Jones warning in a speech on December 8 that a CBDC might displace the Australian currency and cause consumers to shun commercial banks completely.