Key Takeaways
- The Central Bank of Malaysia has written to Bloomberg that it is “actively assessing” the pros and cons of a central bank digital currency.
- The Bank has focused on boosting both its technical and policy capabilities for CBDCs.
- Malaysia’s Central Bank has been musing publicly about CBDCs, as well as about critical technologies like blockchain, for a relatively long time.
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The Central Bank of Malaysia, otherwise known as the Bank Negara Malaysia, has been exploring the possibility of its own central bank digital currency.
Studying CBDCs
The central bank of Malaysia is examining a central bank digital currency.
Per an email response to Bloomberg, the Central Bank of Malaysia has been weighing whether bringing its own central bank digital currency would be a boon to the nation. Malaysia’s Central Bank wrote that it “is actively assessing the value proposition of [a] central bank digital currency (CBDC) to Malaysia.”
The Central Bank of Malaysia added further:
“While a decision has not been made to issue CBDC, we have focused our research on CBDC via proof-of-concept and experimentation to enhance our technical and policy capabilities, should the need to issue CBDC arise in the future.”
In September 2021, the Central Bank joined Project Dunbar, which seeks to test the utility of central bank digital currencies in international settlements, which are often both slow and costly. The results of the project have been promising, according to the Bank of International Settlements, a member institution on the project, which wrote that “a multi-CBDC platform” could “significantly improve cross-border payments.” Furthermore, the BIS claimed that modern technologies like distributed ledgers and “the programmable nature of smart contracts and CBDCs” helped address many of the previous challenges and questions surrounding the feasibility of CBDCs used for international settlements.
In its Annual Report for 2020, the Central Bank of Malaysia cautioned that the volatility, vulnerability to cyber threats, and scalability issues made most current digital assets poor currencies. Even then, however, the Central Bank was actively weighing the risks with the potential benefits. Ultimately, Malaysia’s Central Bank wrote that rather than a CBDC being “an end in itself…it can be a tool to achieve broader public policy outcomes.”
Several nations have begun dialogues on CDBDs, including as Mexico, Canada, England, and the United States, while other countries, such as China and Nigeria, have already issued one.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and several other cryptocurrencies.
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