Digital Turkish Lira Advances: Phase Two Report Highlights

The Central Bank of the Republic of Turkey (CBRT) has released the second-phase progress report for the Digital Turkish Lira Project, marking a significant step forward in the country’s exploration of central bank digital currency (CBDC) development. The newly published report provides detailed insight into ongoing research, system design, and technical capabilities, with a particular emphasis on programmable payments, offline transactions, and interoperability.

According to the statement accompanying the report, the CBRT continues to develop the Digital Turkish Lira within a framework guided by principles such as privacy, architectural flexibility, technological adaptability, non-dependence on a single intermediary, and a “first, do not harm” approach to the broader financial system.

Expanding the Foundation Built in Phase One

The first evaluation report, published at the end of 2023, laid the conceptual and technological groundwork for Turkey’s digital currency initiative. In Phase Two, the CBRT has expanded these foundations, focusing on strengthening the prototype system created during the initial stage.

The goal is to transform this prototype into a minimum viable product (MVP) that incorporates financial intermediaries, enabling broader testing, scalability assessments, and improved system stability. The central bank emphasizes that the Digital Turkish Lira is designed not to replace existing systems but to function as a complementary payment channel that enhances innovation, boosts financial inclusivity, and supports unified payment infrastructure standards across the domestic market.

Programmable and Offline Payments at the Core of Phase Two

The second-phase report highlights two main technical pillars:

• Programmable payments, enabling transactions with embedded conditions or automated execution logic

• Offline payments, allowing digital currency transfers without internet access
  These capabilities are considered essential for creating a resilient, adaptable, and future-oriented digital payment ecosystem.
  The CBRT also notes that it has completed proof-of-concept experiments for cross-border payments, exploring how a national digital currency might interact with international systems. These evaluations aim to support long-term research into interoperability and the potential evolution of global CBDC frameworks.

Holistic Research: Legal, Economic, and Technical Dimensions

Analysts are evaluating potential macroeconomic effects, including how a digital currency might influence financial stability, market liquidity, and the role of existing intermediaries.

Simulation studies are already underway to assess how various adoption levels or transaction patterns might affect the broader financial ecosystem. These analyses will inform future policy decisions as the project advances.

Pilot Testing to Expand in the Upcoming Period

As in the first phase, the second phase will include an extensive pilot testing program.
The CBRT states that upcoming pilot tests will:

• Evaluate new system functionalities

• Measure performance under varying conditions

• Stress-test operational limits

• Simulate high-activity scenarios to assess scalability
  The next wave of tests is expected to yield richer, more detailed data, enabling the central bank to refine its technological infrastructure and validate system behavior under real-world conditions.

Intermediary Integration and Digital Identity Development

The progress report also confirms ongoing work on:

• Integrating financial intermediaries into the Digital Turkish Lira System

• Applying digital identity frameworks specifically to digital currency use cases

• Exploring the role of digital assets in broader interoperability design

• Advancing cross-border transaction experiments
  These efforts aim to position the Digital Turkish Lira within a broader digital ecosystem rather than as an isolated payment tool.

Toward a Third Phase and Potential Circulation Decision

The CBRT states that once the second phase is completed, a comprehensive evaluation report will be published. Additional documents—covering technical areas in greater detail—are also planned.

Notably, the institution notes that completing Phase Two will pave the way for Phase Three, during which authorities may decide whether to put the Digital Turkish Lira into circulation. Should such a decision be made, regulatory frameworks, legal adjustments, and operational processes would be put in place to support nationwide implementation.

The progress report concludes by emphasizing that technological, legal, and economic research will continue in coordination, guiding the project toward a structured and well-evaluated next stage.