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KUALA LUMPUR: Bank Negara Malaysia (BNM) will collaborate with Asean 5 – Singapore, Thailand, Indonesia, the Philippines and Malaysia – and Bank for International Settlements (BIS) Innovation Hub in Singapore, to set up a multilateral payment platform called Project Nexus to facilitate cross-border payment connectivity, said assistant governor Suhaimi Ali (pix).

He said that the domestic payment system in place is “quite efficient”, but pointed out that cross-border payment connectivity remains a challenge because it is “costly, slow…opaque”.

The project is targeting to make cross-border payment transaction as efficient as the existing domestic payment system.

In addition, he remarked that the know-your-customer issue needs to be resolved to make sure that those who are making transactions are not “conduit to crimes and illegal activities”, in regard to the multilateral connectivity and the platform.

“The challenge of the governance and oversight or regimen over a multilateral platform is something that you cannot undermine the complexity,” he said during his panel session entitled Going Digital with Confidence in an Innovative Landscape at BNM’s Sasana Symposium 2023 today.

There are several issues such as the central bank’s oversight in the platform, that are being addressed in the project before the platform’s implementation.

At this moment, he said that the project is an exploration that Asean 5 is working towards and cannot confirm the final outcome.

Meanwhile, he added that the central bank is also working on a peer-to-peer connectivity fund transfer going forward and is expected to “go live by year-end with two countries and one more next year”.

Suhaimi said that these are some of the initiatives that BNM is doing “to future proof our payment”.

On other developments, BNM is also exploring the use of CBDC (central bank digital currency).

“Our e-payment right now in Asia is actually quite advanced, but we know that there are also several use cases when it comes to CBDC. We are in the process of doing the Proof of Concept and trying to test several use cases of CBDC, and be ready in case CBDC is something that we need to implement in the future.

“The other things that we are doing, for example, is the modernisation of our large visual payment system,” said Suhaimi.

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