Building Digital Walls To Defend Sovereignty

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The accelerating convergence of quantum computing, artificial intelligence, and stablecoin technologies has placed Malaysia’s financial sector at crossroads.
While these innovations promise efficiency, speed, and inclusion - they also introduce unprecedented vulnerabilities that could destabilise the nation’s economy and sovereignty.
As financial crimes become more sophisticated, borderless, and automated, the idea of creating a national intranet: a semi-closed digital ecosystem similar to China’s “Great Firewall” or its “national internet” is gaining quiet traction in security circles.
The question is not simply technological but existential: can Malaysia afford to remain open in a world where cyber and financial terrorism can paralyse an economy in minutes?
To understand why this debate matters, one must first appreciate the growing complexity of financial terrorism.
Financial terrorism
Unlike traditional terrorism, which relies on physical violence, financial terrorism weaponises economic systems by using cyberattacks, digital currencies, and AI-driven market manipulation to destabilise states, erode public trust, and drain national wealth.
In recent years, Malaysia has seen an uptick in cyber-fraud, cryptocurrency scams, ransomware, and data breaches targeting banks and government agencies.
These incidents are no longer isolated criminal acts but components of larger, transnational networks that leverage advanced technologies to infiltrate financial infrastructure.
The quantum threat compounds this danger. Google’s Willow quantum chip and its “verifiable quantum advantage” have demonstrated that we are nearing an era where quantum computers can perform calculations thousands of times faster than current supercomputers.
As LevelBlue’s research warns, this capacity could render traditional encryption obsolete, enabling actors to decrypt sensitive financial or governmental communications.
For Malaysia’s financial system which is anchored on classical cryptographic protocols represents an existential vulnerability.
If foreign or non-state entities develop quantum capabilities before Malaysia upgrades its defences, the consequences could be catastrophic.
This includes stolen financial data, disrupted payment systems, and manipulation of central-bank operations. The line between cybercrime and economic warfare would disappear overnight.
Simultaneously, stablecoins: digital assets pegged to fiat currencies are revolutionising cross-border finance. Their efficiency and low transaction costs have attracted legitimate businesses and investors, but they have also become tools for illicit finance.
Blind spots involving stablecoins
According to TokenAlphabet, stablecoins now account for hundreds of billions in global market value, with vast daily transaction volumes moving largely outside traditional banking oversight.
The Brookings Institution has warned that this decentralised ecosystem creates blind spots for regulators and threatens national monetary sovereignty.
For Malaysia, where the financial system relies on controlled capital flows and currency stability, uncontrolled stablecoin use could open backdoors for money laundering, sanctions evasion, and terrorist financing.
Moreover, the integration of AI into the global financial ecosystem adds another layer of volatility. AI-driven bots can manipulate financial markets, generate deep-fake investment schemes, and execute large-scale phishing or identity-theft campaigns.
Worse still, AI can automate the entire criminal process from identifying potential victims to laundering proceeds via crypto exchanges that leaving little human trace.
Malaysia has already witnessed AI-assisted scams targeting small investors through social media platforms, often linked to overseas operators.
When such AI tools combine with quantum computing’s decryption capabilities and the anonymity of stablecoins, a new type of financial terrorism emerges: invisible, instantaneous, and highly coordinated.
China’s ‘Great Firewall’
Given these converging threats, I strongly contend that Malaysia should explore developing its own national intranet, modelled after China’s system.
While China’s “Great Firewall” is frequently criticised for its censorship practices, its core infrastructure fulfils a broader strategic objective by ensuring national cyber-sovereignty.
By routing domestic traffic through state-controlled gateways, China can monitor data flows, filter foreign content, and isolate its digital infrastructure from external attacks.
This structure gives Beijing a high degree of resilience against foreign cyber-intrusions and financial manipulations, while allowing rapid control during crises.
Could Malaysia adopt a similar approach, tailored to its democratic and open-market context? In theory, a Malaysian intranet could act as a defensive barrier around the country’s financial and governmental networks.
Domestic financial institutions, payment gateways, and e-government systems could operate within a closed, high-security environment, shielded from the global internet’s volatility.
External connections could be strictly regulated, passing through quantum-resistant encryption and monitored exchange nodes.
Such an architecture would reduce exposure to ransomware attacks, foreign data breaches, and stablecoin-based financial terrorism.
Affecting global connectivity
However, this strategy comes with profound trade-offs. Malaysia’s economy is highly dependent on global connectivity particularly in trade, digital services, and finance.
Implementing a China-style intranet risks fragmenting the digital ecosystem, deterring foreign investors, and stifling innovation in fintech and AI.
Unlike China, Malaysia lacks the scale and domestic tech ecosystem to fully localise its digital economy. A rigidly closed intranet might inadvertently isolate Malaysia from international capital markets and innovation flows, undermining its goal of becoming a regional digital hub.
That said, a hybrid model, a “sovereign digital firewall” that could offer a pragmatic compromise. Instead of a total intranet, Malaysia could establish segmented, sovereign networks for critical sectors such as banking, telecommunications, energy, and government data.
These sectors would operate under quantum-resistant, AI-secured private networks, with regulated gateways for international transactions.
This would enable continuous economic interaction while ensuring that Malaysia’s most vital financial systems remain insulated from external shocks.
In addition, real-time blockchain monitoring tools, AI-driven anomaly detection, and cross-agency cyber-intelligence centres could enhance resilience without closing the nation’s digital borders.
Problems plaguing Southeast Asia
The geopolitical context further strengthens the argument for greater digital sovereignty. Southeast Asia has become a battleground for cyber-espionage, financial manipulation, and data exfiltration by both state and non-state actors.
Quantum-ready nations or crypto-enabled terrorist networks could exploit Malaysia’s open internet architecture to infiltrate financial systems or destabilise markets.
Financial terrorism, unlike conventional warfare, does not require armies or weapons but it requires access, algorithms, and unguarded digital infrastructure.
In this environment, an intranet or sovereign digital firewall becomes not a symbol of isolation, but of self-defence.
Malaysia must also frame this within a broader national security doctrine. The protection of financial sovereignty can no longer be confined to central-bank regulation or cyber-law enforcement as it must be integrated into national defence planning.
A new council
To mitigate such risks, Malaysia should establish a National Cyber-Financial Security Council that unites Nacsa, Bank Negara Malaysia, Finance Ministry, the Armed Forces Cyber Command, and key private-sector partners.
This council would coordinate real-time intelligence sharing, set and monitor national encryption standards, and conduct simulations of quantum-enabled financial attacks to evaluate and strengthen the country’s preparedness.
Yet, technology alone will not suffice. Malaysia must cultivate domestic capabilities. Relying solely on foreign vendors for cybersecurity infrastructure exposes the nation to strategic dependency.
Investing in post-quantum cryptography research, AI ethics, and blockchain forensics within Malaysian universities and start-ups will create the foundation for long-term digital resilience.
Ultimately, Malaysia’s challenge is to strike the delicate balance between openness and sovereignty. A closed intranet like China’s may be too blunt a tool for a democratic, trade-dependent nation, but complete openness is untenable in an age of quantum-enabled financial terrorism.
The future likely lies in managed interconnectivity, a national digital architecture that remains globally linked but domestically fortified.
In this new era, the front line of national defence is not at the border but it is at the firewall. - Mkini
R PANEIR SELVAM is the principal consultant of Arunachala Research & Consultancy Sdn Bhd, a think tank specialising in strategic national and geopolitical matters.
The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.

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