Malaysia Joins CDBC Race—Kickstarts Research Process

Bank Negara Malaysia, the country’s central bank, has reportedly hopped on the train to develop a digital version of its currency. Currently, the project is still in the research stage with the country only “assessing the value proposition” of this kind of financial product.

Releasing a central bank-issued digital currency (CBDC) continues to gain traction in global financial discourse. While China currently boasts the most advanced CBDC product, other countries like Mexico, Indonesia, and Nigeria have also made meaningful strides in the CBDC race.

Bloomberg recently reported that Malaysia is the latest sovereign state to take a plunge in the CBDC space. Although it has not outlined any concrete plans yet, the Asian nation has initiated research to ascertain the effect of a central bank digital currency on its monetary policy and if it would be beneficial for the economy, noting:

“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.”

Central Bank of Malaysia Previously Partnered with Other Apex Banks to Explore CBDC Systems

Meanwhile, Bank Negara Malaysia collaborated with the central bank of Australia, Singapore, and South Africa to develop a cross-border payments trial using multiple CBDCs. The apex bank aimed at ascertaining whether the involved parties could cut the costs of such transactions and create more accessible channels to utilize them.

The combined project, dubbed Project Dunbar, aims at developing prototype shared platforms to allow direct cross-border CBDC transactions without the need for middlemen.

A central bank digital currency, popularly called CBDC, is a digital token developed and issued by centralized institutions like governments and central banks. That said, many have argued that this new initiative could negatively affect the monetary system and impinge on people’s freedom.

A vocal supporter of this message is infamous whistleblower Edward Snowden, who has labeled CBDCs “perversion of cryptocurrency” and a “cryptofascist currency,” considering the kind of power they give to the government over society.