Bank Negara Malaysia (BNM) has stated that it has no immediate plans to issue a Central Bank Digital Currency (CBDC).

According to the central bank, the existing monetary and financial policy tools are effective in safeguarding monetary and financial stability. “Moreover, domestic payment systems, including the real-time retail payments platform (RPP) also continues to operate safely and efficiently to support the needs of the economy and allow real-time digital payments,” said BNM.

Bank Negara’s Annual Report 2020 acknowledged that technological advancements and increasing pace of digitalisation have led to the rising adoption of digital payments and the emergence of privately-issued digital assets; these include Bitcoin, Ethereum, and Stablecoin.

However, most digital assets in their current form are not used as payment instruments mainly because they “do not exhibit the universal characteristics of money”. Essentially, BNM said that the characteristics of these assets prevent them from being a good store of value and medium of exchange. The central bank also pointed out their vulnerability to price volatility and cyberthreats, as well as lack of scalability.

“For example, the price of Bitcoin recorded a steep decline of 39% within a single day in March 2020. Hence, it is crucial for the public to have a clear understanding of digital assets such as their features, underlying technology, and corresponding risks,” BNM said. However, Bank Negara noted that digital assets that are linked or backed with assets such as currency in order to minimise volatility have emerged, such as Stablecoin.

“Nevertheless, given that this is a rapidly evolving situation, we will actively assess the potential value proposition of CBDC in light of developments in the digital assets and payments space,” said Bank Negara. “Key policy decisions on CBDC will be guided by clear benefits to Malaysia as a whole, while ensuring that the associated risks arising from CBDC issuance, particularly financial stability risks, are effectively managed.”

(Source: Malay Mail)

• TAGS:
• Bank Negara Annual Report 2020
• Bank Negara Malaysia
• BNM
• Central Bank Digital Currency (CBDC)
• Cryptocurrency
• Digital Currency