EU Outlines Digital Euro Strategy: What's the Status of the Digital Lira?

The Central Bank of the Republic of Türkiye (CBRT) is making significant strides in its digital Turkish lira project, joining the ranks of China and Japan in the global digital currency race.

Operating under new digital banking regulations, Ziraat Dinamik Bank A.Ş., the first fully digital bank in Turkey, is expected to play a central role in supporting ADTL-related developments. Launched in November 2024 with a capital of ₺2.5 billion, the bank will undoubtedly contribute to the digital Turkish lira's success.

The second phase of the digital Turkish lira project is currently underway, involving testing digital identity integration, mobile applications, offline payments, programmable transactions, and interoperability with existing financial systems. Additionally, focus areas include cybersecurity, data management, and monitoring environments for the digital Turkish lira system.

One notable aspect of the digital Turkish lira is its potential benchmarking to gold instead of being pegged to fiat currency. One "Gold Digital Turkish Lira" (ADTL) is reportedly equivalent to the value of gold, roughly equivalent to ₺1,000 Turkish. This unique approach aims to enhance security, cost efficiency, and flexibility, serving as a cornerstone of Turkey's broader digital transformation.

The digital Turkish lira is expected to serve as a complementary payment channel, expanding financial inclusion, reducing fragmentation in payment systems, and providing a foundation for new digital applications. Potential use cases range from micro-payments and cross-border transactions to applications in smart cities.

Meanwhile, the European Central Bank (ECB) is preparing to launch a digital euro later this year, pegged directly to the value of the traditional currency. However, ECB economist Jurgen Schaaf warned that widespread use of dollar-backed stablecoins in the Eurozone could undermine monetary sovereignty. ECB President Christine Lagarde emphasized the importance of establishing a legal framework for the digital euro.

The digital Turkish lira project follows the U.S. Congress passing the "Genius Act," a federal framework regulating the stablecoin market. Industry stakeholders, such as Selim Gusar, CEO of PayBull, view Turkey's move toward a digital lira as a bold step that strengthens both inclusivity and security in the financial system.

Integration with Turkey's existing infrastructures, such as the FAST instant payment system and e-government platforms, is part of the roadmap for the digital Turkish lira. Once the digital lira is introduced, it will allow Central Bank-issued money to circulate digitally alongside traditional bank deposits, providing continuous real-time availability.

As the digital Turkish lira system unfolds, it is expected to contribute significantly to Turkey's digital transformation, enhancing the country's position in the global digital currency landscape.

EU Outlines Digital Euro Strategy: What's the Status of the Digital Lira?