Pakistan entering into a new era of digital finance
Pakistan is entering a new era of digital finance with the State Bank of Pakistan (SBP) piloting its Central Bank Digital Currency (CBDC)—a sovereign digital form of money set to revolutionize the country’s financial landscape.
While RAAST, the real-time payment
system launched in 2021, has already facilitated over Rs8 trillion in
transactions, the CBDC marks a fundamental shift. Unlike RAAST, which serves as
a payment rail, the digital rupee is legal tender in digital form—issued,
regulated, and backed directly by the SBP.
With mobile phone penetration
exceeding 82% and projected remittance inflows of $38.3 billion in FY 2024–25,
Pakistan is well-positioned to leverage the CBDC to expand financial inclusion,
reduce transaction costs, and digitize welfare payments. Millions of unbanked
citizens may finally gain access to formal financial services through secure
mobile wallets.
The economic impact of adopting CBDC
will involve short-term setup costs but promises long-term gains in efficiency,
inclusion, and transparency. The SBP’s 2022–23 annual report revealed that
Pakistan spends over Rs28 billion annually on cash-related logistics—including
currency printing, storage, ATM upkeep, and distribution. With cash still
representing about 62% of transaction volume by mid-2023, a shift to digital
currency could significantly reduce these costs.
Read More Banking
experts call for digital transformation of economy
Traditional payment methods remain costly and time-consuming. ATM transactions incur fees ranging from Rs20 to Rs23, while cheque clearances can take up to two business days. These inefficiencies disproportionately affect the underserved. According to the World Bank’s 2021 Global Findex report, more than 100 million Pakistani adults remain outside the formal financial system.
SBP data from 2024 shows that RAAST
has processed over 160 million transactions across bank accounts and
e-wallets—enabling instant, free transfers. However, experts note that RAAST
itself is not designed to be revenue-generating. In contrast, CBDC is sovereign
digital money, not tied to the balance sheets of commercial banks.
Pakistan is following a global
trend. Countries like China and The Bahamas are deploying CBDCs to modernize
finance and extend access. The IMF praised China’s digital yuan pilot in 2022
for enhancing access to secure digital payments, especially in areas with
limited banking services. Similarly, The Bahamas’ Sand Dollar, introduced in
2020, has expanded financial services to remote island communities.
Pakistan’s legal framework for digital
currency is already in place. The Digital Currency Regulatory Framework (DCRF),
enacted in 2024, authorized SBP to issue digital legal tender and established
standards for cybersecurity, data privacy, and digital banking licenses.
To further strengthen the digital
finance ecosystem, Pakistan passed the Virtual Assets Act, 2025, which created
the Pakistan Virtual Asset Regulatory Authority (PVARA). This body oversees
virtual assets including cryptocurrencies, tokenized instruments, and related
financial services. PVARA enforces strict AML/KYC rules and licenses service
providers, aligning Pakistan with global standards such as those of the Financial
Action Task Force (FATF).
Read More Pakistan
looks to regulate digital assets, including cryptocurrencies
Through PVARA, Pakistan joins jurisdictions like Singapore and the UK in building robust digital asset regulations to protect consumers, prevent financial crimes, and foster innovation.
Pilot projects under consideration
include using CBDC wallets for direct disbursement of social programs like BISP
and Ehsaas, programmable payments for utilities, and cross-border remittance
corridors. These initiatives could help formalize an estimated $8 billion in
annual informal remittance outflows, according to the World Bank’s 2023 report.
Nigeria’s eNaira offers a proven model—helping streamline government-to-person
payments and reduce leakages.
CBDC rollout aligns with Project
URAAN, particularly its E-Pakistan pillar, which promotes digital governance
and financial inclusion. By offering mobile-accessible digital cash, CBDC could
shrink the informal economy, broaden the tax base, and make financial services
available to remote or low-income populations.
The UNDP, in its 2022 report,
emphasized the potential of CBDCs to accelerate Sustainable Development Goals
(SDGs) by reducing poverty and promoting economic inclusion. For millions of
Pakistanis—daily wage earners, small vendors, or rural residents—CBDC wallets
could become a gateway to formal finance. With only a basic mobile phone, they
could receive aid, make payments, save securely, and participate in the digital
economy—without ever stepping into a bank.
As Pakistan moves forward, the
digital rupee could serve as a powerful tool to bridge longstanding gaps in
access, equity, and economic opportunity.
Source: Business Recorder