Amidst the international drama involving Russia’s invasion of Ukraine, Malaysia is mired in a corruption drama of titanic proportions of its own.
Yet more 1MDB scandal-related revelations have rocked Malaysians’ already battered and bruised trust in our politicians, business leaders and public institutions.
This episode, more than any other in recent history, might have exposed these people and the formerly respected organisations they front for what they resemble: a revolving door of classless, conniving characters leading seemingly cancerous, colluding, corrupt cabals of power.
The most interesting part of the whole affair for me was former banker Tim Leissner’s allegation about how Bank Negara Malaysia (BNM) approved an “overnight” foreign exchange transfer of US$1 billion from 1MDB to PetroSaudi International (PSI) after then central bank governor Zeti Akhtar Aziz’s husband Tawfiq Ayman had allegedly been bribed to “make it happen” – an action Leissner described as “unprecedented”.
Tawfiq has since denied he ever took any bribe.
Such allegations give rise to suspicions and questions about the credibility and impartiality of the organisation that dictates our nation’s monetary policy and as a direct relation, the value of our ringgit.
After all, BNM’s actions directly affect how valuable the money in our bank accounts are, so its actions are of extraordinary relevance to every Malaysian.
But as I’ve written here and here, its monetary policies have not always been beneficial to the everyday Malaysian. Its prolific money printing has produced a dreadful inflationary environment which is devaluing the ringgit and damaging our purchasing power in the process.
These are all obviously distressful developments, but what BNM is considering rolling out might be the most terrifying of them all.
There’s a flurry of talk that governments and central banks of the world, including Malaysia’s, may introduce a Central Bank Digital Currency (CBDC).
A CBDC, in BNM’s own words, is “central bank cash (banknotes and coins) made available in electronic form. Yet, ‘digital currency’ is not new as most central bank money is already digital.
Therefore, the key innovation with CBDC is the potential for non-banks (individuals and firms) to hold direct accounts with the central banks or to transact directly with one another using the CBDC as a legal tender. This has been made possible by the technology used in private digital currencies, namely the distributed ledger technology (DLT).”
