BNM Set To Venture Into Central Bank Digital Currencies In Next Few Years

Alex Cheong Pui Yin

7th February 2022 - 3 min read

Bank Negara Malaysia (BNM) has revealed that it may make a foray into central bank digital currencies (CBDCs) in the next few years. This is in line with the central bank’s objectives to support Malaysia’s financial development and economic transformation via the recently launched Financial Sector Blueprint 2022-2026.

Speaking to Bernama, the governor of BNM, Tan Sri Nor Shamsiah Mohd Yunus shared that like many central banks across the world, BNM is closely monitoring the opportunities and risks that are available in the digital asset space. “We are also going one step further by experimenting with CBDCs over the next few years. After all, there is no better way to keep pace with something new than to try it ourselves,” she said in an email interview.

Tan Sri Shamsiah cautioned, however, that while the idea of experimenting with CBDCs may be both exciting and promising, BNM wants to ensure that it is not just merely “caught up in all the hype and buzz.”

“Therefore, in our exploratory efforts, we will prioritise use cases that have higher upsides for Malaysia. This is consistent with our approach to digital innovation. We do not promote technology for its own sake. Rather, it must deliver tangible benefits to the economy,” Tan Sri Shamsiah stressed.

Previously, BNM had said that it does not have any immediate plans to issue any CBDCs as the existing monetary and financial policy tools are still effective in safeguarding monetary and financial stability. This was later reaffirmed by Deputy Finance Minister II, Yamani Hafez Musa at the end of last year.

On top of sharing BNM’s plans with regard to CBDCs, Tan Sri Shamsiah also revealed that the central bank is currently in the advanced stage of assessing the applications for its digital banking licences. Additionally, it aims to notify all applicants soon, by the end of March 2022.

“What I can say for now is that the application process is very competitive. We received 29 applications. Alas, we will only be able to license a maximum of five, and so we need to thoroughly evaluate each and every single application,” said Tan Sri Shamsiah. BNM had opened up applications for five digital banking licences back in January 2021. Notable contenders include Pertama Digital, Sunway, Grab, Axiata-RHB Bank, BigPay, as well as the state government of Johor and Sarawak.

Aside from these updates, Tan Sri Shamsiah also shared BNM’s aims and aspirations in various other areas, including the development of more digital-first solutions in financial services as well as the state of cybersecurity in Malaysia. Ultimately, she said that the central bank hopes to provide Malaysians with digital options in finance so that they can enjoy seamless payments and convenience.

“Let me be clear: this is not about forcing customers to go digital. Rather, it is about offering people choices. Physical and hybrid options will still be available. The point is that consumers and businesses who are ready for the technology should be able to benefit from it,” said Tan Sri Shamsiah.

(Sources: The Sun Daily, Financial Sector Blueprint 2022-2026)

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Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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