This week, Turkey published its budget for 2023 and a small section was dedicated to the investigation of the central bank digital currency (CBDC). The budget states that “blockchain-based central bank digital money will be implemented.”

However, it is unclear whether a CBDC will be launched in 2023, as the action items cover research and testing. However, a live payments pilot appears to be on the cards.

The three action points are:

• “According to the pilot findings of the second phase of the Central Bank’s Digital Turkish Lira Research and Development Project, tests for the use of the Digital Turkish Lira for payments will begin.”
• “The integration of digital Turkish lira systems with digital identity and FAST systems will be completed within the scope of research and development.”
• “Research, development and testing activities will be carried out with banks within the scope of wholesale digital currency studies.”

The budget allocated funds to the Central Bank of the Republic of Turkey (CBRT), the Ministry of Treasury and Finance, and the scientific research organization TUBITAK.

A year ago, the central bank announced research contracts with TUBITAK and two other defense organizations, Aselsan and Havelsan.

Regarding the motivations for a CBDC, the project was grouped in the budget as part of international trade payments. Nationwide, around 40% of the Turkish population is unbanked. And it’s a young digital demographic, with more than half of citizens under the age of 35.

Regarding cross-border trade, four central banks (China, Hong Kong, United Arab Emirates, and Thailand) recently completed trials of a multi-CBDC platform for trade payments using the MBridge platform.