Pakistan Is Considering Digital Currency Adoption Within Its Borders: FM Aurangzeb

A special session of the World Economic Forum (WEF) was recently held in Saudi Arabia. Finance Minister of Pakistan, Muhammad Aurangzeb attended the session. He revealed that the government is considering an initiative to introduce digital currency in Pakistan.

Finance Minister Aurangzeb Expresses Pakistan’s Contemplation Towards Digital Currency Adoption

Reports claim that Aurangzeb briefly discussed Pakistan’s baby steps towards significantly adopting digital currency. He added that the government has been committed to helping underprivileged women across Pakistan. Furthermore, he brought up a general issue where women often fell victim to cash theft by their family members and endorsed digital wallet solutions to help them.

It is pertinent to mention that the idea of integrating digital currency was floated by State Bank of Pakistan (SBP) Governor Jameel Ahmad at a Senate panel meeting in July 2023. At that time, he revealed that SBP was working to launch its own Central Bank Digital Currency (CBDC). Moreover, the regulator was said to be reviewing work done by other central banks to launch its own CBDC.

However, the central bank has been in denial about digital currencies for the past few years. While the world chose to move forward, SBP doesn’t want to. SBP’s last year’s Financial Stability Review reveals that such assets can affect the effectiveness of monetary policy as they are not subject to oversight. Moreover, they cannot control like traditional elements of the money supply in the economy. Due to this, it results in weaker monetary policy transmission channels.

According to the report, SBP is also cautious of digital currencies creating challenges for FX-related control mechanisms. Digital currency can lead to an unexpected outflow of capital which can be a source of concern for a country facing foreign exchange challenges like Pakistan.

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