In Conversation with Zeynel Abidin Avcı and Bilgehan Kürsad Öz of the Central Bank of the Republic of Türkiye

The Central Bank of the Republic of Türkiye (CBRT) is playing a catalytic role in the development of a “robust and innovative payment landscape,” most notably with the establishment in 2021 of an instant payment system and, more recently, its work on a digital Turkish lira. Central Bank Payments News (CBPN) caught up with CBRT Deputy Executive Directors Zeynel Abidin Avcı and Bilgehan Kürsad Öz for a detailed discussion of these initiatives, what comes next, and how the central bank is building a financial ecosystem for the future.

CBPN: Recent payments developments from the Central Bank of the Republic of Türkiye (CBRT) include the Instant and Continuous Transfer of Funds (FAST) System, which went fully operational in January 2021 and, more recently, work on the digital Turkish lira. Can you please tell us your overall strategy to promote the payments ecosystem in Türkiye?

CBRT: Of course. Türkiye has been one of those countries which has a vibrant payment ecosystem. Therefore, the aim is to continuously innovate and improve with cutting-edge technology in the payments arena. In order to achieve this goal, the CBRT promotes the payment landscape by creating the appropriate environment, infrastructure, value-added services, and maximum availability.

When we break down this strategy into the steps taken so far, the genesis was the FAST System as the base for future developments. Since the get-go, working collaboratively with the Interbank Card Center (BKM), the CBRT has been developing and launching overlay services such as Proxy Addressing, QR Payments, SİPER for secure payments, and Request to Pay over the FAST. Efforts such as designing merchant QR payments have enabled the use of the FAST in transactions for goods and services.

In addition to establishing the solid base infrastructure and overlay services, the CBRT aims to extend the reach of the system and foster innovation to promote the overall ecosystem by widening access to the FAST. Non-banks are allowed to participate, while more opportunities will be extended by allowing open banking services, such as managing accounts and initiating payments independent of the system participants. Beyond the current playing field, the next step we are researching is the possibility of interlinking FAST with other instant payment systems (IPS).

Meanwhile, the CBRT has also been working on its Digital Turkish Lira Project, whose Phase One Evaluation Report was published at the end of 2023. Phase Two has started at full steam. The CBRT believes the digital Turkish lira will be the future of payments.

When the digital Turkish lira becomes fully operational, we expect various enhancements to our payment ecosystem, such as the development of a complementary payment channel, increased financial inclusion, uniformity in payments, and a bedrock for further innovation.

Coupled with the digital one, the hard infrastructure is also important in our strategy. Istanbul Financial Center (IFC) is set to be a global financial services hub, with easy access to world markets. The direct effects of having such a center would be increased financial competitiveness, high value-added financial products and services, and strong integration with the financial and capital markets across the globe. However, such outcomes cannot be achieved without a robust and innovative payment landscape. Therefore, our novel payments ecosystem is laying the foundation for a leading-edge finance center which attracts diverse regional and international players.

On the other hand, the synergy which comes from the complementary nature of IFC and the Turkish payments landscape would create an opportunity for our country to be a crossroad for trade with local currencies. Combining our digital Turkish lira initiative and the potential interlinking of neighboring countries’ instant payment systems with our FAST System would be the launching pad for the EMEA region to leap over segregating barriers. As a conclusion, the general approach is to make Türkiye a wholistic, integrated, smooth functioning, and forefront payment base firstly within the region and then in the world.

CBPN: As noted above, we understand that the FAST currently serves as the base infrastructure for the payment ecosystem. According to figures from the central bank, the FAST processes 11 million transactions daily, up from two million in mid-2021, and 37 banks and payment and electronic money institutions are now participating in the system. To what do you attribute this increased adoption and have these numbers met, or even exceeded, the central bank’s initial expectations?

CBRT: Apart from having the necessary infrastructure and mechanisms, Türkiye has a tech-savvy population. According to the Turkish Statistical Institute, the ratio of household internet access was 95.5%, and the proportion of individuals who use the internet was 87%; lastly, the scale of e-commerce use among individuals for private purchases was recorded as 49.5% in 2023.[1] Some other reports expand on how technophile our people are. For instance, there are more than ...

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