Today Bank Negara Malaysia (BNM), the country’s central bank, published its annual report laying out its central bank digital currency (CBDC) plans. Beyond its current participation in Project Dunbar for cross border payments, it is also planning to explore a domestic wholesale CBDC later this year and a retail digital currency in 2024.
Project Dunbar is a multi-central bank digital currency (m-CBDC) project for cross border payments, focusing on the use of wholesale CBDC to enable commercial banks to make payments without intermediaries. Its goal is to reduce the costs and inefficiencies in cross border payments. Participants in the project include the Bank for International Settlements and the central banks of Singapore, Malaysia, South Africa and Australia.
In the second phase, the BNM wants to integrate its wholesale CBDC with RENTAS, its real-time gross settlement (RTGS) system. RENTAS offers comprehensive multi-currency settlement and is connected to SWIFT’s worldwide messaging network. This decision may be especially relevant for future tokenized securities settlement as some of the benefits of tokenized securities can only be achieved with real time settlement. While it is possible to integrate a wholesale CBDC with its existing RTGS infrastructure, it may not be ideal, especially given that the system does not operate around the clock.
The third phase is set to take place in 2024 and beyond and will focus on the Bank’s plans to explore a retail CBDC in promoting innovation and enhancing retail payment diversity and resilience, although it states that current systems in the retail sphere are efficient.
Meanwhile, the Monetary Authority of Singapore (MAS) initiated Project Dunbar and recently started a project exploring a retail CBDC following its extensive wholesale CBDC research through Project Ubin.