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With 80 percent inflation and a devalued currency, this country will launch its own CBDC.



Key facts:
  • Turkey’s CBDC will join the traditional financial system through the digital payments system.

  • The CBDC’s intent would be to strengthen Turkey’s existing financial infrastructure.

Is there a country that, despite inflation and currency devaluation, plans to launch a central bank digital currency (CBDC)? Yes. Turkey. A Eurasian nation that is experiencing economic hardship and yet has a clear goal of bringing its local currency to the digital plane.

According to what was presented in Turkey’s Annual Presidential Program for 2023, published this week in the Official Gazette, Recep Tayyip Erdoğan’s government will begin testing the country’s CBDC as early as next year. However, they do not set the exact date.

The CBDC’s arrival next year is in line with the results of the second phase of the research and development project for this currency, which began in September 2021. At that time, the central bank presented digital currencies as a a way to complement the country’s existing payment infrastructure.

In this regard, Erdogan’s government estimates that by 2023 studies for the integration of the Turkish lira’s digital system with the national banking identity.

This means that the Turkish CBDC will be integrated into the local financial system by relying on FAST, the payment system designed by the country’s central bank. The ultimate intent of the project would be to strengthen the existing financial infrastructure in Turkeydespite economic data suggesting a negative moment for the local currency.

Erdogan’s annual program for 2023 suggests that. the body in charge of creating the Turkish lira will be the central bank itself. The Ministry of Finance and other technological research institutes will also collaborate on this project.

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If what is set out in the presidential document is realized, it will conclude the process of establishing a CBDC, which has been underway for just over three years. As reported by CryptoNews, in 2019, the Erdogan administration considered the creation of the digital Turkish lira. The project is part of Turkey’s five-year economic development plan.

High inflation and devaluation of the Turkish physical lira.

The Turkish CBDC announcement comes at a time when the country has suffered from economic problems not seen in more than two decades.. Only in the month of September reported According to the Eurasian country’s National Bureau of Statistics, inflation exceeded 83 percent, a figure not seen since 1998.

Against this backdrop, the Turkish lira has suffered severe depreciation for at least three years. More recently, it has encountered That the national currency of that country depreciated by nearly 25 percent against the U.S. dollar. so far this year.

These data show that. Turkey’s economy is in crisiswhich is detrimental to the welfare of the people. For this reason, the community has taken refuge in bitcoin (BTC) and other cryptocurrencies for years, even though Erdogan’s government bans their use.

As reviewed by CryptoNews, Erdogan said less than a year ago that “they were at war.” against bitcoin and its ecosystem, and also hinted at taking measures to curb the growing use of these assets in the country. In addition, the central bank banned the use of cryptocurrencies as of April 2021.

But this has not stopped the ecosystem from growing. Turkey is the 12th country in the world with the highest adoption rate of cryptocurrenciesAccording to the most recent quotation offered by blockchain security and analytics company Chainalysis.

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