Following in the footsteps of other central banks, the State Bank of Pakistan (SBP) is also doing its due diligence on launching its own digital currency, known as the Central Bank Digital Currency (CBDC), and is undertaking the cost and benefit analysis of this venture.
SBP Governor Jameel Ahmed shared the development while addressing participants at the '1st Pakistan Fintech Forum 2022' held at a local hotel on Wednesday.
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“We have examined almost all the jurisdictions that are either experimenting or have issued CBDCs in their respective jurisdictions. However, we will tread this path very carefully, especially with regard to design choices and use case analysis,” he said.
CBDCs are digital tokens, similar to cryptocurrency, and are the digital form of a country's fiat currency. However, unlike cryptos, a CBDC is issued and regulated by a nation's monetary authority or central bank.
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According to the Atlantic Council, a US-based think tank, over 105 countries, representing over 95% of global GDP, are exploring a CBDC. Meanwhile, 50 countries are already in an advanced phase of exploration (development, pilot, or launch). Ten countries have fully launched a digital currency, with China’s pilot set to expand in 2023, shared the think tank.
Meanwhile, the SBP chief shared plans to also launch a Quick Response (QR) Code-based Person-to-Merchant (P2M) system by next year to enable merchants and small businesses to receive instant payments from their customers.
Ahmed said that despite boasting one of the youngest countries in the world, only 82 million out of an estimated 132 million adults have a bank account in Pakistan. "This translates into an account penetration rate of 62%, which is one of the lowest in the world," he informed.
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The SBP chief said that the central bank is also working on the development of a technical sandbox to test and standardize the Application Programmable Interfaces for various use cases. He also assured the industry that SBP will expedite the process so that the applicants to the Sandbox get a chance to test their use cases.
He said the SBP is also working with service providers towards improving the overall customer journey and user experience so that citizens of Pakistan have easy, convenient and low-cost access to financial services.