top of page

Turkish Lira Enters Into Digital Era!

Berk Cin

Cenk Civan

In parallel with the development and transformation of the banking sector through technology, Central Bank of the Republic of Turkey (“CBRT”) initiated research on the digital Turkish lira (“Digital Turkish Lira“) in 2020. Subsequently, the CBRT launched Phase-1 studies in 2022 and completed Phase-1 studies and published an evaluation report (“Report”) on December 31, 2023.

What is the Digital Turkish Lira?

The Digital Turkish Lira primarily focuses on the transition of the current physical currency used in the existing system (such as banknote, coins) to the digital realm. In other words, the Digital Turkish Lira emerges as the non-conventional form of the Turkish lira as digital currency. The report also emphasizes that the Digital Turkish Lira has a distinct nature compared to crypto assets.

the CBRT emphasizes that in the new era, both traditional banknotes and the Digital Turkish Lira will be in circulation, and that the Digital Turkish Lira will provide for a broader range of functions rather than merely being an electronic currency. For instance, the Digital Turkish Lira can be deposited as money in financial institutions, or the deposits in financial institutions can be swapped back into the Digital Turkish Lira.

Architecture of the Digital Turkish Lira

The CBRT has tested and identified certain fundamental components during Phase-1, including digital identity system, digital currency system, abstraction layer, service layer, and wallet application.

The Report indicates that digital identity and digital currency systems were included as core systems in Phase-1 studies, and that the CBRT decided to use distributed ledger technology (“DLT“) in Phase-1.

The DLT, that is also used in Bitcoin, involves distributing data across multiple networks rather than storing it in a central server. This decentralized approach enhances the defense against cyber-attacks by not keeping data in a single center. In this system, data in the distributed ledger is encrypted and can only be accessed by users with corresponding key code. The Report also indicates that the DLT was chosen due to its high defense capabilities.

During the payment process, the digital identity system that facilitates the verification of parties involves a new and distributed digital identity model, known as the self-sovereign identity (“SSI“) model. Users can store their own personal information on their digital wallet with the SSI model. This personal information is stored on verifiable credentials (“VC”), which can be verified by third parties. Users can freely decide to share the type of information which can be shared on the VC in different instances. Therefore, users will also have the right to withhold the sharing of some of their personal information in the system.

During the development of the Digital Turkish Lira system, the CBRT also works on an account number system, aiming to enable users to conduct transactions without being dependent on the intermediary institutions during the execution of transactions. In other words, users will be able to execute transactions using this account number with other institutions in case of any systemic problems experienced by the institutions that have registered users.

The Digital Turkish Lira distribution model appears to be structured like a pyramid, with the CBRT at the top tier and the intermediary institutions at the second tier. Based on this pyramid model, banks and licensed institutions complying with certain regulations will be able to participate in the system as intermediary institutions. The registration of users engaging in transactions within the system will also be facilitated through these intermediaries.

The wallet, one of the key components, is designed as a mobile application which will enable the users to execute transactions (including money transfers, payments, fund requests), monitor their transaction history and the VCs. The Report also indicates that the CBRT will look into the use of alternative hardware for storing user data and documents in financial transactions.

Key Findings and Assessments

The Report is consisted of findings and assessments obtained during the phase studies, which can be summarized as below:

  • The Report puts particular emphasis on data security, ensuring that digitization prioritizes the highest level of confidentiality for user information.

  • User authorization across multiple accounts is organized with the aim of fulfilling legal needs.

Compliance with regulations pertaining to the prevention of money laundering and terrorism financing is emphasized, indicating that user identity verification through intermediary institutions will be conducted in accordance with legal provisions.

What Is Next in the Upcoming Phases?

The Report outlines the topics that will be addressed in the upcoming phases, including transformations among the forms of the Turkish lira, smart payments, offline payments, and legal and economic considerations. 

First of all, the CBRT aims to design a model enabling users to convert between deposits in banks and the Digital Turkish Lira (and vice versa). To ensure this transformation, the digital money system will be integrated with mobile applications, deposit management systems and ATMs. 

Secondly, the CBRT plans to establish various types of smart payments. For instance, the report mentions the development of conditional payments, allowing users to make payments in predetermined amounts and times based on predefined conditions.

Thirdly, there are plans to design offline payments to facilitate the use of the Digital Turkish Lira in rural areas or disaster areas where internet access may be limited.

Questions About Legal Issues

The Report indicates that during the designing process of the Digital Turkish Lira, there will be a focus on addressing various legal questions. Main legal questions outlined in the Report are as follows:

  • Is there a need for a separate legal classification for the Digital Turkish Lira?

  • What amendments to the CBRT’s laws and regulations (“CBRT Laws”) will be needed for the introduction of the Digital Turkish Lira?

  • What other amendments will be needed for laws other than the CBRT Laws?

  • How will the Turkish data protection laws be applied in the Digital Turkish Lira system?

  • How will the laws related to the prevention of money laundering and financing of terrorism be applied in the use of the Digital Turkish Lira?

  • Will any additional regulations be needed for the interoperability of the Digital Turkish Lira with existing payment systems and in cross-border transactions?

  • Is there a need for ownership restrictions on the Digital Turkish Lira account/wallet?

Based on these questions set forth in the Report, we expect that comprehensive legislative changes will likely to be made in the coming months/years. Therefore, a crucial period seems to be approaching for payment service providers and fintech companies.


Despite the rapid and comprehensive steps taken in the development and design of the Digital Turkish Lira, completion of the process and the introduction of Digital Turkish Lira will require comprehensive legislative changes.

We will continue to keep you informed about the current updates in the Digital Turkish Lira and related legislative amendments as they unfold.


Die Kommentarfunktion wurde abgeschaltet.
bottom of page