Bank Negara Malaysia (the central banking institution of the nation) has reportedly joined the global race to develop a digital version of its national currency. As of the moment, the project is still in a research mode as the county is only “assessing the value proposition” of such a financial product.
Malaysia Enters the CBDC League
Launching a central bank digital currency has been a target for many countries recently. While China’s efforts are by far the most advanced globally, other nations such as Mexico, Indonesia, and Nigeria have also started exploring the initiative.
According to a recent Bloomberg coverage, Malaysia is the newest state dipping its toes. Despite not making any final decisions, the Asian country has started researching how a central bank digital currency could affect its monetary network and whether it will be beneficial for its economy:
“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.”
A few months ago, Bank Negara Malaysia joined forces with the central banks of Australia, Singapore, and South Africa to organize a cross-border payments trial using multiple CBDCs. The financial institutions aimed to estimate whether all parties could reduce the costs of such transactions and make them more accessible.
The mutual effort, dubbed Project Dunbar, vowed to develop prototype shared platforms to enable direct CBDC transactions without the need for intermediaries.
The Controversy Around CBDCs
Central bank digital currencies are digital tokens issued and fully controlled by superior institutions such as governments and central banks. As such, their use-cases caused many debates, and numerous individuals claimed they could harm the monetary system and reduce people’s freedom.
One such person strongly against CBDCs is the infamous US whistleblower – Edward Snowden. Last year, he labeled them as a “perversion of cryptocurrency” and a “cryptofascist currency,” as they could grant a lot of power to the governments and leave less independence to society.
To prove his statement, Snowden pointed out China. According to him, the total ban on everything crypto there, alongside the release of the digital-yuan, is intended to “increase the ability of the State to impose itself in the middle of every last transaction.”
He also opined that the creation of a CBDC in the USA would not be the digital equivalent of the dollar:
“After all, most dollars are already digital, existing not as something folded in your wallet, but as an entry in a bank’s database, faithfully requested and rendered beneath the glass of your phone.”