The Pakistani government has made a strategic decision to launch a digital currency with the aim of reducing currency printing and distribution costs. This move is expected to have multiple positive impacts, including strengthening the value of the rupee, fostering economic growth, and facilitating a more extensive range of financial transactions.
The digital currency’s value will be pegged to the Pakistani rupee, similar to how one unit of the Chinese digital currency is equivalent to one Chinese Yuan. Supported by the State Bank of Pakistan (SBP), the Pakistani digital currency will be issued with the government’s guarantee, much like traditional currency notes. The SBP has already commenced work on introducing this digital currency and is enlisting the expertise of specialists in the field.
A dedicated department, the Central Bank Digital Currency, is currently conducting a cost-benefit analysis and feasibility study for the digital currency’s seamless adoption and utilization upon its launch.
While the government aims to gradually phase out physical currency notes in favor of digital currency, it also intends to maintain a parallel existence, with an 80:20 ratio between digital currency and paper currency notes. This approach ensures that in unforeseen situations, physical currency notes remain available as an alternative.
The transition to digital currency is expected to yield several advantages. It will significantly reduce expenses associated with the printing of currency notes, their distribution to various cities, and the disposal of old notes. Furthermore, every transaction conducted through digital currency will be meticulously documented, enhancing the effectiveness of monetary policy enforcement.
Digital currency has the potential to stimulate cross-border trade and investment and extend financial services to unbanked individuals. It can also enhance the efficiency, resilience, and reliability of the financial industry. According to the World Bank, blockchain technology, a form of distributed ledger technology, plays a crucial role in enabling these advancements.
The introduction of digital currency by the Pakistani government marks a significant step toward modernizing its financial infrastructure and aligning with global trends in digital finance and payments.
