Business

Erik Gibbs

Turkey could see a central bank-issued digital currency

It was reported this week that China is considering a central bank-backed cryptocurrency in response to Facebook’s Libra coin. Another central bank is now also considering launching its own coin and, while this was not directly tied to Libra, the timing of the announcement is a little suspect. 

Turkey unveiled (in pdf, in Turkish) its new economic road map this week that calls for greater development through blockchain innovation. One of the items on the agenda is a possible central bank digital currency (CBDC) and the country’s government expects to see some forward progress on the subject between now and 2023.

The plan includes the creation of legal and technology frameworks that are backed by the government to increase the use of blockchains for “transport and customs” activities. It could also be used in artificial intelligence and Internet of Things (IoT) devices, which would be used by the government to improve public services.

There has been talk in the country of a CBDC for more than a year when Turkey’s former Industry Ministry and the deputy chair of the Nationalist Movement Party, Ahmet Kenan, broached the subject. However, since then, not much movement has taken place. Facebook’s Libra could be the catalyst needed to advance the digital currency in the country.

Perhaps the central bank’s governor, Murat Cetinkaya, was opposed to the idea of a CBDC. He was just fired by Turkey’s president, Recep Tayyip Erdogan, for what the leader said was essentially subordination. In removing Cetinkaya, Erdogan appointed Murat Uysal to the position, asserting that the new governor will be more supportive of the president’s plans. If Uysal follows Erdogan’s idea of a “complete overhaul” of the central bank, a digital currency issued by it is not out of the realm of possibility.

Along with the attempts to introduce more blockchain support, the new guidelines also call for a new Association of Payment Services and Electronic Money Institutions, as well as the creation of the Istanbul Finance and Technology Base. Given that many banks in Turkey are already partnered with crypto exchanges, the development of a CBDC would be able to capitalize on those relationships.

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