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Malaysia’s Central Bank Explores Bitcoin & XRP as Currency Alternatives
Bank Negara Malaysia (BNM), the country’s central bank, has recently published a working paper exploring the potential of Bitcoin and XRP as alternatives to traditional currency. This move signifies a significant shift in the policy level, showing an openness towards cryptocurrencies as mainstream payment systems.
In the paper, BNM examines the application of these digital assets within Malaysia’s financial infrastructure. The suggestion is that, if widely adopted, Bitcoin and XRP could eventually replace traditional money, distancing it from physical cash and bank deposits.
Despite this optimism, BNM still has concerns about embracing Bitcoin and XRP. The report highlights challenges that these cryptocurrencies face. Neither Bitcoin nor XRP has a stable nominal anchor, which makes them too volatile to substitute for existing payment systems.
However, the central bank emphasized that major issues must be addressed before any widespread adoption of digital currencies can occur. Stability and scalability are among the key challenges that cryptocurrencies must solve in order to gain a place within the mainstream banking world.
The paper also emphasizes the importance of effective regulations and consumer protection. Establishing clear regulations will be vital for addressing cryptocurrency-related risks and ensuring their safe utilization.
BNM has stressed the need for Malaysia to have an infrastructure that can handle large-scale cryptocurrency transactions. The central bank highlights that cryptocurrencies require price volatility and large volumes of transactions before they can achieve widespread adoption.
Another critical aspect discussed in the report is the problem of intermediaries within the crypto ecosystem. This decentralized nature means there isn’t a single power controlling liquidity. The report warns that reliance on these intermediaries could concentrate liquidity and bring about counterparty and operational risks.
Although BNM has taken a cautious stance towards Bitcoin and XRP, it does not rule out their long-term prospects. Malaysia’s moves to harness these crypto assets are merely part of a global shift in the financial sector.
This article is part of our Crypto Academy: Learn with us
Source: cryptotale.org
