BNM Wants Islamic Finance to Move Beyond Tokenisation Pilots
RWA Signal Insight
InfrastructureBank Negara Malaysia (BNM) is pushing the Islamic finance sector to transition from experimental pilot projects to large-scale, repeatable tokenized sukuk issuances. Assistant Governor Mohamad Ali Iqbal emphasized the need for wider adoption during the Islamic Financial Market Committee Roundtable 2026, citing successful pilots in tokenized sukuk settlement using tokenized deposits. The central bank has launched the SSDS+ platform to provide a robust infrastructure for issuing and safeguarding these digital assets. By moving beyond one-off projects, BNM aims to deepen secondary market liquidity and attract a larger share of international investors to the Malaysian market. Currently, foreign participation in Malaysian Government Investment Issues remains low at 8 percent, highlighting a significant growth opportunity for tokenized Islamic debt. Furthermore, the mandatory transition to the MYOR-i benchmark rate by July 2027 is intended to enhance market integrity and standardize Islamic financial products. These efforts solidify Malaysia's position as a global leader in Islamic finance, having topped the Islamic Finance Development Indicator for 14 consecutive years.
Key points
- BNM launched SSDS+ to facilitate the issuance and safeguarding of tokenized bonds and sukuk.
- Foreign investors hold only 8% of Malaysian Government Investment Issues, signaling growth potential.
- MYOR-i becomes the mandatory Islamic benchmark rate for all financial institutions by July 2027.
- Malaysia maintains the top global ranking in the Islamic Finance Development Indicator for 14 years.
Background
Sukuk are Islamic financial certificates that comply with Sharia law, functioning similarly to bonds but representing partial ownership in an underlying asset rather than a debt obligation. Malaysia is a global hub for this asset class, utilizing these instruments to fund infrastructure and government projects while adhering to profit-sharing principles.