Malaysia has joined the growing number of countries considering the launch of a central bank digital currency (CBDC). Malaysia’s central bank, Bank Negara Malaysia, announced on January 17th to Bloomberg a corresponding declaration. It states that a decision on the exact procedure for developing a CBDC has not yet been made. Still, research into a CBDC was already underway “through proof-of-concept and experimentation to improve our technical and policy capabilities.”
Malaysia joined forces with other central banks from Australia, Singapore and South Africa in September last year. The common goal was to enable the use of central bank digital currencies for international settlements via a common platform in a project named Project Dunbar to test.
CBDC aims to reduce transaction costs
The Dunbar project used the Corda and Quorum blockchain platforms from r3 and ConsenSys, respectively. The aim was to demonstrate different possibilities of blockchain-based cross-border transfers. Most notably, the banks wanted to explore how blockchain technology could “eliminate the need for intermediaries and reduce the time and cost of transactions.”
The results, which Malaysia and its partners will be publishing shortly, will inform the development of future platforms for global and regional settlements. Technical prototypes of the common platforms have already been Singapore FinTech Festival presented in November 2021. Unlike the countries of the EU, the countries of the Asia-Pacific region do not have a common currency. Therefore, they strive for more efficiency in cross-border payments.
Several central banks, most notably those in China, are already testing the use of a CBDC. Ultimately, it aims to make everything related to money transfers – from transfers between banks to consumer purchases – cheaper and more efficient.
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