Pakistan’s central bank is taking significant steps towards the development of a central bank digital currency (CBDC). Finance Minister Muhammad Aurangzeb’s recent statements at a World Economic Forum meeting in Riyadh have provided renewed momentum to the country’s economic transformation. Aurangzeb emphasized that the informal economy is a major obstacle for Pakistan, with a significant portion of the country’s annual income going unrecorded, amounting to approximately 40 billion.
One of the key points highlighted by Aurangzeb is the importance of financial inclusion for women. He emphasized the need for policies that support women’s financial empowerment, including the promotion of digital wallets to strengthen their financial security, especially for those facing issues like cash theft. He also mentioned the importance of digital payments to enhance the effectiveness of government aid programs.
The State Bank of Pakistan (SBP) has set a target to launch a digital rupee by 2025. SBP President Jameel Ahmad stated that the plan takes into consideration the experiences of other central banks with CBDCs and aims to prioritize the security of the digital currency. Amidst high inflation and increased interest in cryptocurrencies, the transition to a national digital currency is seen as a crucial step to strengthen the economy and maintain control.
However, Pakistan’s move towards CBDCs is not solely driven by internal economic reasons. Regional neighbors, particularly India, have started pilot programs to expand the use of CBDCs, prompting Pakistan to take action in order to keep up with these developments.
Central banks around the world are actively researching and developing digital currencies, highlighting the relevance and timeliness of Pakistan’s steps towards CBDCs. This development offers great potential to reduce the informal economy and increase financial inclusion as part of the country’s economic transformation.
Pakistan is currently at a crucial turning point in its transition to a digital economy. Finance Minister Aurangzeb’s statements indicate that the country will continue to take decisive steps in this transformation process. The CBDC plans could provide a promising roadmap for Pakistan’s economic future.
Disclaimer: This article does not provide investment advice. Investors should be aware that cryptocurrencies are highly volatile and carry risks, and should conduct their own research before making any investment decisions.
