Pakistan’s central bank is ‘carefully studying’ CBDCs, says governor

The governor of the State Bank of Pakistan, Reza Baqir, has indicated that the institution is carefully studying the possibilities opened by central bank digital currencies.

In an interview with CNN reporter Julia Chatterley on Thursday, Baqir noted that countries, such as China, are “already showing the way” when it comes to CBDC issuance, further outlining the motivations behind the central bank’s interest in CBDCs:

“The benefit for us is twofold: Not only does [potential CBDC issuance] give another boost to our efforts for financial inclusion but, second, if the central bank issues a digital currency, it allows us to make further progress in our fight towards Anti-Money Laundering, towards countering terrorism financing. So, we are at a stage where we are studying it. We hope to be able to make an announcement on that in the coming months.” 

Baqir added that the central bank has already given the green light for a framework, within which digital banks can begin to operate in Pakistan — among them, challenger or neobanks that don't necessarily have a brick-and-mortar presence.

In response to a question regarding Stripe, the world’s largest fintech, and its reported interest in the Pakistani market, Baqir said that the company would be “very welcome.” He emphasized that Pakistan is a market that is home to the fifth-largest concentration of people worldwide, with high levels of tech literacy and a relatively young population. The country, in his view, is “waiting to burst as far as digitization is concerned.”

Baqir also noted that during the coronavirus pandemic, the central bank had moved to eliminate fees on interbank transfers, which led to a 150%–200% growth in mobile banking transactions for the quarter ending in December 2020 as compared with the previous year.

The State Bank of Pakistan had announced back in spring 2019 that it aims to have issued a CBDC by 2025. As reported, regional Pakistani legislators, meanwhile, have been advocating for more movement on the decentralized digital currency front, with a resolution passed recently in the northwest of the country calling on the government to legalize cryptocurrency mining in the country.