Central bank digital currencies (CBDCs) are increasingly seen as a way to improve fiat capabilities. This includes Pakistan, which has announced new regulations to guarantee the launch of their own CBDC by 2025.
Warranty for CBDC launch
Pakistan’s central bank, the ‘State Bank of Pakistan’ (or SBP for short) has reportedly signed new laws for electronic money institutions (EMIs). These are often non-banking entities that offer digital payment instruments. The laws aim to ensure the timely issuance of a CBDC in the coming years. The World Bank reportedly assisted in the design phase of the new regulations.
The regulations justify the preventive measures that will be taken against money laundering and terrorist financing, taking into account consumer protection and reporting requirements.
Licenses to issue CBDC
The country’s central bank is reported to be issuing licenses to EMIs for the issuance of the yet-to-be-launched CBDC. According to the country’s Finance Minister Asad Umar, the use of EMIs in promoting the digital economy will better protect financial institutions against cyber threats. SBP’s Deputy Governor, Jameel Ahmad, envisages curbing fiat-induced corruption and inefficiency through CBDCs. He said the following:
These groundbreaking regulations are a testament to the SBP’s commitment to openness, technology adoption and digitalization of our financial system.
Pakistan not only country
Pakistan is certainly not the only country exploring the launch of a CBDC, or already developing one. There are now almost 100 countries that have started working on this. For example, neighboring India recently joined the race to launch its own CBDC. She even announced an ambitious plan to launch another retail CBDC pilot by the end of this year.
They are reportedly in the final stages of preparing the pilot roll-out for their digital Rupee. It will initially be launched for retail. This will of course have to be tested first, with somewhere between 10,000 and 50,000 users expected to participate. It is not yet known when the digital rupee will be officially launched, or whether, for example, China will be the first to launch their CBDC.