Digital Ringgit – Is Malaysia Ready?

<p>&nbsp;Recently, Bank Negara's Financial Sector Action Plan 2022 to 2026 is about to revive discussions about the launch of the central bank's digital currency even though they previously stated that they still have no immediate plans.</p><p><br /></p><p>This move began to gain attention due to the launch of the National Digital Identity or Digital ID for Malaysians with the Prime Minister, Datuk Seri Anwar Ibrahim becoming the first Malaysian to obtain a digital identification last Friday.</p><p><br /></p><p>Launch of Central Bank Digital Currency (CBDC) is a digital currency similar to the famous cryptocurrency Bitcoin. It will be issued by the central bank with a fixed value equal to paper currency.</p><p><br /></p><p><br /></p><p>According to an Investopedia report, traditional fiat money such as paper money and coins will be digitized in a credit model. In China, their declining economy due to the Covid-19 pandemic has triggered a technological trend to ensure their economic movement is not restricted.</p><p><br /></p><p>Rakuten Trade's head of equity sales, Vincent Lau opined that it may be too early for most countries to implement CBDC as the average of them is still observing and studying at the POC stage.</p><p><br /></p><p>The resurgence of Bitcoin's price in the past year has revived interest in the digital currency as the United States recently issued an executive order to set federal standards to regulate artificial intelligence capable of producing more cryptocurrencies.</p><p><br /></p><p>Banking analysts say that CBDC will provide various benefits and disadvantages to the financial system. It has the potential to improve payment efficiency, improve financial inclusion and improve security.</p>