Central banks' digital currency studies and situation analysis for Turkey

Simplifying the concept of trade, which has existed since the earliest days of humanity, has always been a goal for humanity. While barter was adopted in early trade, the concept of money emerged in later periods due to the diversification of goods and the impossibility of valuing them in exchange. Initially made of precious metals, money later gave way to paper money, which was easier to carry and use, and subsequently, the majority of the money within the system transformed into fiat money. Technological advances have led to the development of crypto assets such as Bitcoin and Ethereum, which are seen as alternatives to money in the market, enabling the creation of alternative systems to existing payment systems. This alternative system has given rise to a new financial system beyond the control of central banks, and due to their decentralized nature, it has created an unregulated area within the financial system. This has brought to light central banks' concerns about losing control over the money supply and payment systems. These concerns have forced central banks to consider the idea of issuing digital central bank money. This study aims to provide information on the origins and development of central bank digital currencies (CBDCs) used today, the current status of digital currency developments at specific central banks active in the system, and to identify their strengths and weaknesses, identify opportunities and threats, and identify internal and external factors that will influence their market acceptance. The study defines money and provides detailed information about its historical journey. It also addresses crypto assets that have recently emerged as alternatives to traditional central bank currencies. It examines how central banks are responding to these newly emerging crypto assets, which are constantly increasing in user numbers and transaction volume. As part of the situation analysis, SWOT and PEST analyses were conducted regarding the CBRT's digital currency initiatives. The analyses revealed that their key advantages include increased access to financial services, increased speed and efficiency of payment systems, and the prevention of informal activities and tax losses/evasion. Disadvantages include security concerns and the possibility of cyberattacks, and the fact that these systems, dependent on the internet and electricity, make financial access impossible during major natural disasters and wars.