On Thursday, the Governor of the State Bank of Pakistan, Jameel Ahmad, announced plans to accelerate the development of a central bank digital currency (CBDC). A digital Pakistani rupee could be introduced by 2025.

Upcoming CBDC Jobs

The State Bank of Pakistan has largely lagged behind in the global CBDC race. Other countries in the region, including India, have been working on pilots for some time now, and plans to test wholesale and retail use cases are already underway.

By contrast, Pakistan has been dragging its feet. The central bank introduced laws to lay the foundations for a future digital currency in 2019, but while it is now speeding up implementation, it appears to be in an early research phase.

Local sources reported that Mr. Ahmad advised patience, as he does not want to rush the decision without first reviewing the work done by other central banks and assessing the risks to the Pakistani economy.

Potential CBDC Motivations

Many developing countries are focusing their CBDC efforts towards financial inclusion to help the unbanked gain access to digital payments and other basic financial services. However, the State Bank of Pakistan might also be thinking about monetary sovereignty.

Given the astronomical rate of inflation (38% as of May), cryptocurrencies and other fiat currencies may become attractive to local businesses and individuals. The country is clamping down on the cryptocurrency boom, but in 2022 Pakistan ranked sixth in global adoption, one place behind the United States.

Runaway inflation and spillover effects on exchange rates could mean that other (more stable) fiat currencies could gain an advantage if things continue to go south. Meanwhile, earlier this year, Pakistan allegedly bought Russian crude using the Chinese yuan as payment.