Recently, Turkey’s President Tayyip Erdogan determined that the government must finish testing the central bank’s digital currency in 2020. The digital lira, based on a government blockchain, is in next year’s annual presidential program.
Turkey is not the first country to make a similar announcement. China is accelerating its plans to have a sovereign national currency on the blockchain. And Venezuela had already announced its own cryptocurrency last year, the Petro. Here and there, other similar intentions have been disclosed.
But after all, is there an advantage in having a digital currency issued by a central bank? Generally speaking, there would be no difference in central banks issuing stablecoins or conventional money. That is, the State would continue to be the issuer, could freely issue the currency and the issuance would not be auditable.
Despite this, this trend of Turkey and China should make other countries go in the same direction. In Brazil there are no plans to do so. But recently the Brazilian Central Bank informed it is developing a new payment system based on a blockchain. In addition, the technology had been considered to create an information exchange platform.
Within the Turkish pilot plan, the government plans to develop a software platform for instant payments based on the digital lira. Together with the central bank, the project will also involve Turkey’s national technology innovation agency – Turkey’s Scientific and Technological Research Council, also known as TUBITAK.
If the issuance of sovereign cryptocurrencies is not a major advantage, having a blockchain-based payment system can boost transactions and have positive impacts on the economy in the long run.