A Measured Approach to CBDCs
While many nations have displayed a high level of interest in Central Bank Digital Currencies (CBDCs), Malaysia has been more measured in its approach. This was recently highlighted by Bank Negara Malaysia (BMN) Deputy Finance Minister Yamani Hafez Musa as he explained that “The financial system in Malaysia continues to support the functioning of the economy while meeting the needs of individuals and businesses.”
While the Finance Minister indicated there are no immediate plans for a CBDC, he did leave the door open for this possibility in the future. Until then, BMN is taking part in programs such as ‘Project Dunbar’ to ensure it will not be left behind if/when it changes its stance.
‘Project Dunbar’ is an ongoing study involving various central bank, each ‘exploring the benefits of a single international payments platform’.
Kazakhstan Releases Early Results from CBDC Pilot Program
The National Bank of Kazakhstan (NBK) has recently released the official whitepaper for the ‘Digital Tenge’ – its potential CBDC currently in the final stages of its pilot program.
Found within this report, are various noted benefits which a digital tenge can bring to the table.
- Tokenization of ownership
- Offline payments
- Configurable anonymity
- Special purpose tokens
- Ease of Integration
Moving forward, NBK indicates that a final decision on whether it will introduce the digital tenge will be made in Q4 of 2022. It states that this decision will be made, “based on the results of comprehensive study of potential benefits and risks, elaboration of technological aspects, assessment of impact on monetary policy and financial stability as well as possible effect for the National Payment System and its participants.”
A Warning from CZ
Naturally, with rising interest in CBDCs, many have begun to wonder what effect they will have on other digital assets like Bitcoin. In a recent article penned by Binance CEO Changpeng Zhao (CZ), he shared his views on the topic.
While he acknowledges various benefits of CBDCs, CZ clearly notes certain characteristics which differentiate them from Bitcoin.
- Unlimited supply
- Higher fees
Although there are caveats attached, CZ lists the aforementioned characteristics making CBDCs replacing Bitcoin ‘unlikely to happen’.
With the vast majority of government CBDCs still in a developmental stage, CZ took the time to issue words of caution moving forward. He states, “Regardless of the strengths and weaknesses of CBDC’s, I still believe in the infinite potential of crypto, and having an additional option is usually better than not. Overall, the more crypto choices we have, the better. However, as Governments and regulators look to create their own CBDCs, I caution them against their very walled-garden nature.
Freedom of money is the inherent principle of crypto and blockchain. Trying to place restrictions and barriers that I’ve outlined above may stifle innovation and technology development, which I believe are vital for both national economies and the global crypto and blockchain infrastructure.”