Pakistan to Launch a CBDC by 2025
- Pakistan is said to have about 9 million crypto holders.
- Despite regulatory concerns, crypto activities in Pakistan compete strongly with those in India and Vietnam.
Central bank digital currencies (CBDC) have taken the finance world by storm and seem to be on the radar of every country. Financial regulators intend to harness the potential of blockchain technology to improve fiat capabilities. Pakistan has now announced its plans to launch its own CBDC by 2025. The Islamic nation also announced new policies that would accommodate its newly-formed plans.
As per a local news source, the World Bank helped Pakistan draft the new law that the State Bank of Pakistan (SBP) signed for Electronic Money Institutions (EMIS), which are non-bank businesses that provide digital payments.
The SBP plans to ensure the issuance of CBDCs in Pakistan in three years. Additionally, regulators in Pakistan are seeking measures to ensure consumer protection and prevent possible crimes such as terror financing and money laundering.
According to the local report, EMIs will receive licenses to issue CBDCs from the SBP. While speaking at the announcement, Asad Umar, the finance minister, clarified that using EMIs to promote the digital economy will protect financial institutions from cybersecurity risks. Additionally, Jameel Ahmad, the deputy governor of the state bank, SBP, intends to use CBDCs to address corruption and inefficiencies brought on by fiat. Speaking on the importance of the new regulation, he said,
These landmark regulations are a testament of the SBP’s commitment toward openness, adoption of technology and digitization of our financial system.
Pakistan has now joined the roughly 100 nations that are actively interested in exploring and establishing CBDC activities. While the United States has no plans to launch one, the Federal Reserve called for public opinion on the value of a CBDC in the US. Others, like Russia and India have moved closer to launching a digital token. Last month, the Reserve Bank of India (RBI) unveiled an ambitious proposal to start a retail CBDC pilot program by the end of 2022.
Crypto in Pakistan
The crypto industry appears to be a difficult subject to discuss in Pakistan’s financial dialogue. A layperson has little understanding of blockchain technology, and it appears that the nation is not yet prepared for the promised digital transformation.
However, statistical evidence shows something remarkable. About Nine million Pakistanis, or 4.1% of the population are thought to be cryptocurrency holders. According to a study by the Policy Advisory Board (PAB) of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the total value of all cryptocurrency ownership in the country is $20 billion, nearly twice as much as the $10.3 billion in foreign reserves that the State Bank of Pakistan currently holds.
A previous report by Chainalysis ranked Pakistan third in the Global Crypto Adoption Index 2020-21, coming behind Vietnam and India. The study also revealed that Pakistan outperformed India in terms of cryptocurrency adoption growth between 2020 and 21 with a 711% increase, surpassing India’s 641% increase.