Malaysia’s Central Bank blazes own path in digital currencies
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The bank prefers a project to gauge the merits of a central bank digital currency with an initial focus on wholesale CBDCs
The initial stage is unlikely to focus on a retail CBDC similar to China’s digital yuan or Sweden’s e-krona
The world’s central banks are slowly beginning to acknowledge the impact that digital payments are having on the financial system and economy. Interest intensified when China launched its own Digital Yuan. Countries then began actively experimenting with the opportunities presented by exploring their own central bank digital currency (CBDC) but not all preferred China’s retail approach to it. In Southeast Asia, Malaysia’s Central Bank signaled it would rather run a pilot project to gauge the merits of a CBDC instead of focusing on a retail CBDC similar to China’s digital yuan or Sweden’s e-krona.
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6/11/2021 10:15:40 AM GMT | By Pablo Piovano
Foreign inflows into the Malaysian debt market seems to have lost some momentum in May, according to Julia Goh, Senior Economist at UOB Group, and Economist Loke Siew Ting.
Key Quotes
“Malaysia recorded an eighth straight month of foreign portfolio inflows totalling MYR1.7bn in May (Apr: +MYR5.2bn). Although foreigners remained net buyers of domestic bonds, pace of inflows eased to MYR1.9bn (vs. Apr: +MYR6.4bn), marking the lowest inflows since Sep 2020. Foreigners remained net sellers of domestic equities of MYR0.2bn (vs. Apr: -MYR1.1bn).”
“Bank Negara Malaysia’s foreign reserves rose by USD0.1bn m/m or USD3.3bn year-to-date to USD110.9bn as at end-May, the highest level since Dec 2014. The latest reserves position is sufficient to finance 8.4 months of retained imports and is 1.1 times total short-term external debt.”