Within the scope of the calendar regarding the Economy Reform Package, the Central Bank of the Republic of Turkey (CBRT) will implement the economic, technological and legal infrastructure of digital money by the end of the year.
According to the information compiled by the AA correspondent, within the framework of the Economic Reform Package announced by President Recep Tayyip Erdogan, the work to establish the economic, technological and legal infrastructure of digital money will be carried out by responsible institutions, including the CBRT and the Presidential Finance Office.
It is stated that the transition to private digital currencies forces the definition of money, the role of central banks, the financial intermediation model and the transmission of monetary policy. It is stated that central banks feel more responsible for responding to the dramatic developments of cryptocurrencies and increasing the efficiency of payment systems.
Digital currencies challenge the traditional structures of the financial system, and against this backdrop, central banks face the threat that individuals can store, spend and move value without relying on the fiat currency. This is seen as a major threat to the traditional role central banks play in monetary policy.
Speaking to Anadolu Agency (AA), Istanbul Commerce University Faculty of Business Administration Faculty Member Associate Professor Ayben Koy stated that blockchain-based Central Bank Digital Currency (CBDC) projects have gained momentum in the last few years.
Koy said, “While restrictions on cryptocurrencies were at the forefront in the past, today it is seen that CBDCs using the same technology are quickly projected by developed and developing economies.”
Reminding that the IMF and the World Bank launched initiatives regarding a currency that is semi-cryptocurrency called “Learning Coin” in 2019 in order to learn better about blockchain technology and to investigate its application areas, Koy said, “In 2020, Sweden started testing its digital currency, e-krona, while Japan announced it began work for the digital yen in January 2020.”
Koy said blockchain technology is an example of new technologies.
“Required regulations in legislation should be implemented in multiple ways”
Associate Professor Ayben Koy stated that projects on CBDCs are continuing all over the world and that the goal of the CBRT and the Presidency Finance Office to complete the processes quickly is a correct and necessary step.
Koy said, “The steps of the public towards the use of blockchain technology in the financial sector are not new in Turkey. On the other hand, international competition makes it important to accelerate the work in this field. I find it important, necessary and appropriate that these activities are expressed and supported by the Presidency.”
Stating that there is a need for regulation in terms of cryptocurrencies and payment systems in the legislation, Koy said, “The statements made by Visa, Mastercard and Paypal regarding the use of cryptocurrencies in payment systems and their supporting decisions show that regulations are inevitable. Another aspect of this need is that new cryptocurrencies are starting to be traded in blockchain technology every day, and the intense interest of investors.”
Stating that economies that allow banks to keep cryptocurrencies will experience the advantages of being a pioneer in these developments, Koy said:
“The accounting processes of businesses that have cryptocurrencies in their accounts are a separate topic of discussion. In summary, the regulations required in the legislation should be implemented in a multifaceted way. It should not be limited to only investment and tax issues. The developments in the crypto money market in terms of price and volume show that the market is growing rapidly. Numerous developments such as CBDC projects and statements by payment service providers affect these markets positively. Volatility in price movements means that your investment can multiply or disappear overnight. Investors should not direct all of their savings to these risky tools and the expectation that a limited number of cryptocurrencies will be included in payment systems in the future should not be ignored.”
“The competition in the field of technology now spreads to the field of financial technology”
Bahcesehir University Blockchain Research Application Center Director Dr. Bora Erdamar said that it is important to officially start digital money studies in line with a strategic plan and that many countries in the world have increased their investments in the digital economy and financial technology solutions, which have become more important with the pandemic.
Erdamar said, “Very important companies, banks, technology giants have the opportunity to create their own money with infrastructures inspired by blockchain technology and announce their work in this field one by one. In China, the digital yuan project was implemented in the pilot phase, even distributed to the public with bonuses and its use is encouraged.”
Reminding that the European Central Bank published a report on the “digital euro” and made a statement saying “If Europe wants to become a center of attraction for innovations, this project is inevitable”, Erdamar said. “This week, the central banks of Japan and Thailand announced that they are planning to rapidly implement their work in this direction. So the competition in the technology field is now spreading to the financial technology field.”
Emphasizing that the decentralized cryptocurrency ecosystem is growing exponentially day by day and institutional investments in this area have increased, Erdamar made the following evaluations:
“On behalf of our country, we will better understand how important it is to integrate cryptocurrencies and digital money ecosystems with a strategic road map and to implement our own projects in this field. Coordinated by the Presidential Finance Office, the efforts to make Istanbul a technology and finance base, the digital currency project carried out with the Presidency Digital Transformation Office and the CBRT are extremely critical for the financial stability and financial freedom of our country. On the other hand, while at least 4 years is targeted for the digital euro, I find it very important for digital TL to analyze the examples in the world without rushing and to fully realize the potential in this field.”
Source: AA / Translated by Irem Yildiz