R&D studies are carried out for the digital lira for which the "technological, economic and legal infrastructure" is prepared. Digital central bank money; It is expected to provide advantages in areas such as speed and cost.
Functioning as a unit of measure, exchange and storage of value, central bank money can manifest itself in the form of cash or through accounts held at the central bank . The difficulties posed by cash money in areas such as storage and transfer have begun to be solved with the development of information technologies and today the distribution of money has become electronic.
Although it can be said that the dollar, euro, lira are 'already digital', the concept of digital central bank money envisages a much more fundamental digitalization in the financial system, not absolute. The Payments and Market Infrastructures Committee, CBDC:
He described it as "the digital version of central bank money, unlike what is held in traditional style reserve or settlement accounts . "
🚨Let's get to know the digital central bank coins
Digital central bank money; It should not disrupt the integrity of the fiat money order in which it will take place, it should not eliminate the cash by imposition, and it should improve the payment system in an inclusive way. Based on these three main principles, the International Payment Bank has announced that there are 14 things that make CBDC:
▶️Convertibility: It must be able to be converted into cash to ensure integrity.
▶️Ease of use: It should be used as easily as cash.
▶️Validity : It should be included in not only online but also offline payments.
▶️Low cost: It should not cost the end user.
▶️Security: It must be resistant to cyber attacks.
▶️Instant speed: Transactions should be able to take place almost instantaneously.
▶️Durability: It must be resistant to power outages and system failures.
▶️Availability: The system must be available and operational 24 hours a day, 7 days a week.
▶️Transaction capacity : It should be able to handle a large number of transactions.
▶️Scalability: When the transaction volume grows, there should be no problems.
▶️Interoperability: It should be compatible with digital payment systems in the private sector.
▶️Flexibility: It should be flexible to policy changes.
▶️Legal infrastructure: The jurisdiction of the central bank should be clearly defined.
▶️Standards: Must comply with relevant regulations and standards.
🚨Why are central banks researching CBDC?
In addition to the CBRT, many countries and central banks such as China, the USA, Saudi Arabia, the United Arab Emirates, Japan, and the European Central Bank are working on CBDC. These studies carried out around the world are not without reason.
According to research by #PricewaterhouseCoopers (PwC) , CBDC can offer a number of different advantages to a central bank.
↘️Reduces transaction costs: Individual and corporate transactions can be made cheaper.
↘️It stimulates the economy: This step to be taken within the scope of digital transformation can pave the way for local innovations and increase economic mobility.
↘️It expands the scope of finance: It can include people who do not have a bank account in the financial system due to physical conditions.
↘️It provides an opportunity to be a pioneer: The sooner a country launches its digital currency, the more it has the opportunity to lead monetary policies that will be shaped by CBDC.
↘️Cheaper to store and transport: Digital money is easier to store, occupy less space, and carry more easily compared to physical money.
↘️It can eliminate the intermediary: The central bank can reach the citizen directly, without the intermediation of banks, with an individual CBDC project.
↘️Increases competition: CBDC can increase competition between banks and within the private sector.
↘️Policy convenience: The central bank can intervene in the economy more directly and make policy changes faster.
↘️Liquidity: CBDC can provide liquidity support to central banks in the short term.
On the risk side , it can be said that CBDCs raise questions on issues such as financial stability, commercial banks and reliability .
🚨Requires international cooperation
Financial authorities emphasize the importance of global cooperation in the development of digital central bank currencies . US Federal Reserve (Fed); As part of the digital dollar project, it works with the Bank for International Settlements, UK and European central banks . BIS says the following about this union:
“One state's digital central bank money can affect another state's monetary policy or financial stability. Again, this CBDC can be used to violate laws and regulations in a region outside that state's jurisdiction. In order to prevent unwanted results, central banks and public officials will need to be transparent and cooperate in this process. "