BNM evaluating potential of central bank digital currency, says deputy minister

The Bank Negara Malaysia logo is seen inside Sasana Kajang in Kuala Lumpur June 24,2019. — Picture by Ahmad Zamzahuri
The Bank Negara Malaysia logo is seen inside Sasana Kajang in Kuala Lumpur June 24,2019. — Picture by Ahmad Zamzahuri

KUALA LUMPUR, March 24 — Bank Negara Malaysia (BNM) is actively evaluating the potential of central bank digital currency (CBDC) which is driven by the growing technology and payment landscape.

Deputy Finance Minister I Datuk Mohd Shahar Abdullah said the CBDC is different from cryptocurrency in that it is a digital currency issued by central banks to achieve public policy objective such as increasing efficiencies of cross-border payments and progressing financial inclusion.

“As an example, BNM had recently cooperated with the central banks of Australia, Singapore and South Africa through the Dunbar Project to develop prototype for shared platform which enables international settlements using various CBDCs by reducing dependency on intermediaries.

“This prototype platform has the potential to reduce cost and time taken to carry out cross-border transactions,” he said during a winding up debate on the motion of thanks for the Royal Address for his ministry at the Dewan Negara today.

According to Mohd Shahar, the outcome of the project would be used by BNM and other central banks to develop a more efficient next-generation payment infrastructure.

He also explained that, in line with the government’s stand, cryptocurrencies such as bitcoin are not suitable for use as payment instruments due to various obstacles including price fluctuations, exposure to cyber threats, lack of scalability, and negative impact on the environment.

Hence, the currencies are not recognised as a legal tender in Malaysia. — Bernama