Governor of Central Bank of Turkey Stresses CBDC Cooperation for Global Financial Stability

Hafize Gaye Erkan, the Governor of the Central Bank of the Republic of Turkey (CBRT), recently addressed the importance of central bank digital currencies (CBDCs) in the global financial landscape. Speaking at the Central Banks Forum meeting of the Organization of Islamic Cooperation (OIC)-Economic and Commercial Cooperation Standing Committee (COMCEC) in Istanbul, Erkan highlighted the significance of CBDC initiatives and their potential impact on the financial world.

Erkan emphasized that central banks in developed countries are nearing the maturation of their CBDC projects. She underlined that the current juncture is pivotal, and cooperation between the Bank for International Settlements (BIS) and the OIC holds the key to establishing secure and robust CBDC systems.

During the meeting’s sessions, several critical topics were discussed:

  1. Global Economic Outlook: The forum examined the global economic outlook and the economic prospects of OIC member countries.
  2. Central Bank Digital Currencies (CBDCs): The latest developments in CBDC design and utilization were assessed. The importance of inter-central bank cooperation in the CBDC realm was underscored.
  3. Local Currency Trade: The growing significance of trading in local currencies at the global level was a topic of discussion. The benefits and challenges of conducting trade with local currencies, especially in emerging market economies, were explored. Strategies for enhancing trade using local currencies were also examined.

Governor Erkan took a moment to express condolences for the recent disasters in Morocco and Libya, offering prayers for those affected and thanking others for their support during similar challenges in Turkey earlier in the year.

Shifting her focus to the global economic landscape, Erkan noted the transition from a prolonged period of oversupply, low interest rates, and low inflation to a new era marked by supply chain disruptions, persistent inflation, and heightened geopolitical risks, particularly related to critical raw materials and base metals.

Erkan also delved into the realm of Central Bank Digital Currencies (CBDCs), acknowledging the advanced progress made by central banks in developed countries. She stressed the importance of BIS and OIC cooperation in ensuring the secure and efficient implementation of CBDC systems. Erkan explained that the essence of digital money lies not solely in its digital nature but in its status as a monetary technology issued by a central bank. To achieve an efficient and effective global transfer for inclusive and sustainable trade and investment, CBDC projects must prioritize interoperability and high-performance payment processing systems.

In the context of the Organization of Islamic Cooperation, Erkan highlighted the vital role of interoperability in facilitating cross-border CBDC transactions for trade and remittances. She emphasized the need for global optimization, which should extend beyond national boundaries to encompass individual companies and users.

Erkan’s insights shed light on the evolving landscape of central bank digital currencies and the collaborative efforts needed to ensure their success in the global financial ecosystem.

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