Bank Negara Malaysia (BNM) is actively conducting preparatory work to assess the potential of a wholesale Central Bank Digital Currency (CBDC), according to The Sun.
The goal is to significantly enhance the efficiency of cross-border payments and settlements between banks, ultimately promoting greater financial inclusion for all Malaysians.
The central bank believes that Malaysia’s existing domestic payment system effectively handles retail payments, making a retail CBDC less of a priority for now.
Since beginning its exploration of CBDC in 2017, BNM has focused its efforts on three key areas: building internal capacity, conducting preparatory work for a potential future issuance of wholesale CBDC, and deepening its understanding of the underlying technology.
This approach ensures that BNM is well-prepared to manage the policy implications and logistical requirements of issuing a wholesale CBDC, should it decide to do so.
Over the next two years, BNM plans to further investigate the practical applications of CBDC and Distributed Ledger Technology (DLT) to address existing challenges and achieve public policy objectives.
In addition, BNM is also progressing on Project Nexus, a joint initiative with the Bank for International Settlements (BIS) and central banks from Singapore, Thailand, the Philippines, and India.
This project aims to link instant payment systems like DuitNow into a unified network, enabling secure and instant cross-border transactions using proxies like mobile phone numbers.
Phase 3 of the project focused on transitioning to live implementation, including developing a governance roadmap, a revenue model, and detailed technical specifications.
With its operational phase (Phase 4) set to begin this year, full implementation of Project Nexus is expected by 2027.
Featured image credit: Edited from Freepik
