KUALA LUMPUR: Bank Negara Malaysia (BNM) said it has no immediate plans to issue wholesale central bank digital currency (CBDC) but is exploring its potential and undergoing preparatory work to understand the implications.
According to the World Economic Forum, wholesale CBDC is used among banks and other licensed financial institutions for interbank payments and securities transactions.
To futureproof key digital infrastructures, BNM said wholesale CBDC is one of the emerging technologies that it is exploring, citing its potential to improve cross-border payments, enhancing efficiency of payment system and advance financial inclusion.
It said digital assets have evolved over time, with increasing focus on exploring how the underlying technology, which is the blockchain or distributed ledger technology (DLT), can help improve the economy.
"We actually have 94 per cent of central banks actually involved in CBDC-related exploration. At the same time, we are also seeing regulators providing greater regulatory clarity on digital asset transactions," BNM said in its Digital Payments Media Workshop here today.
It said that the exploratory work on wholesale CBDC began in 2017, which is still ongoing today to address existing pain points and achieve public policy objectives.
BNM is working closely with Securities Commission (SC) to preserve integrity and stability ofdomestic financial system amid developments in digital asset space.
"Our current exploration is primarily focused on wholesale CBDC for both cross-border and domestic space."
"To complement domestic exploratory work, we are also working with other central banks through projects led by the BIS Innovation Hub," BNM said.
While there are various DLT-based digital representations of value, BNM said tokenised deposits and CBDCs hold the strongest potential for the future of payments.
"From a regulatory standpoint, CBDC and tokenised deposits provide the strongest proposition to facilitate payments."
"This is in comparison to a crypto asset where the value is subject to much more volatility and is also subject to dynamics in terms of market supply and demand." "So as a result, the general view is that from a payments perspective, crypto assets may not be something which is acceptable in the space of payments," it said.