Pakistan is studying CBDC for financial inclusion

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The Pakistani central bank is carefully studying central bank digital currencies (CBDCs), its governor has revealed. The South Asian country has been observing China and other CBDC pioneers and will be making a big announcement on this front in the coming months.

Reza Baqir, the governor of the State Bank of Pakistan, joined CNN’s Julia Chatterley to discuss the country’s financial advances and what the future holds for the country. One of the areas he discussed was the possibility of a digital rupee.

“We’re studying that [a CBDC] very carefully. We think that some countries like China are already showing the way,” he stated.

#CBDC, Central Bank Digital Currency in Pakistan?

"We are studying it," says Reza Baqir, Governor @StateBank_Pak citing financial inclusion, tackling money laundering and counterterrorism as possible benefits.

/ PART 2 pic.twitter.com/bY6DFOtGPe

— Julia Chatterley (@jchatterleyCNN) April 8, 2021

The governor believes that a state-backed digital currency’s benefits to the populous nation will be twofold.

“Not only does it 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.”

With its population now at 224 million, Pakistan is the fifth most populous nation globally. This makes it one of the best markets for fintech companies seeking to disrupt the financial industry, the governor pointed out. The central bank has been promoting this financial disruption by promoting the rise of digital banks which don’t have brick-and-mortar locations.

“[Pakistan] is a market where people are generally tech-savvy and it’s a market that’s waiting to burst as far as digitization is concerned.”

The Pakistani central bank has been working on digitizing the payments systems in a bid to promote financial inclusion. As CoinGeek reported in January, the bank launched Raast, an instant digital payments system in partnership with the Bill and Melinda Gates Foundation. It connects merchants, businesses, individuals and government entities, enabling them to make and receive near-instant payments via their mobile phones or the Internet.

Despite the digitization efforts, Pakistan still deems it illegal to own digital currencies. The country’s president Arif Alvi has encouraged investment in blockchain technology, but just like his Chinese counterpart, he maintained a “blockchain not digital currency” narrative. However, there’s light at the end of the tunnel, with reports claiming that the government is considering digital currency regulation.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

See also: CoinGeek Live panel, The Future of Banking, Financial Products & Blockchain