Malaysia has joined a slew of South East Asian countries including Hong Kong, the Philippines, South Korea among others in taking steps towards exploring the possibility of central bank digital currency (CBDC).
Malaysia’s de-facto central bank, Bank Negara Malaysia (BNM), said that it is “actively assessing” a CBDC study.
While no decision has been made to issue a CBDC, the bank’s research is an effort to make sure that it is gearing up for a CBDC program “should the need to issue CBDC arise in the future.”
“We have focused our research on CBDC via proof-of-concept and experimentation to enhance our technical and policy capabilities,”
the bank said in an email response to Bloomberg.
No Immediate Plan for a CBDC
Since last year, Malaysia has been musing publicly about CBDCs. The country’s Deputy Finance Minister said last month that the central bank has “no immediate plans” to issue a CBDC.
“However, BNM will continue to actively assess the potential of CBDC to achieve public policy objectives,” the deputy minister Yamani Hafez Musa noted at the time.
As for the use of cryptocurrencies for payment purpose, he said that cryptos like Bitcoin and Ethereum are not recognized as legal tender in Malaysia and is not regulated by BNM.
In September 2021, the central bank of Malaysia joined to develop a proof-of-concept CBDC pilot dubbed “Project Dunbar” in collaboration with countries including South Africa, Australia, and its neighbor Singapore.
The project sought to test the utility of a CBDC in international settlements in order to cut the time and costs of transactions.
Malaysia also cautioned the volatility, vulnerability to cyber-threats and scalability issues that cryptos face, preventing it from being a good store of value, according to Bank Negara’s annual 2020 report.
