Digital currency pilot project to be initiated, reveals central bank governor.

Digital currency pilot project to be initiated, reveals central bank governor.

**Pakistan Embraces Digital Currency and Regulatory Reforms**

In a significant move towards modernizing its financial system, the State Bank of Pakistan (SBP) is preparing to launch a pilot program for a central bank digital currency (CBDC). This initiative, part of a broader strategy to align with global trends in blockchain-based digital currencies, is expected to begin soon, following the finalization of necessary infrastructure and legal frameworks.

The SBP's digital currency project is a significant step towards integrating digital financial services into Pakistan's financial system. Central Bank Governor Jameel Ahmad has confirmed that the SBP is actively working on building the infrastructure necessary for the digital currency project and is engaging with several tech partners.

The Government of Pakistan has also taken strides in regulating the virtual asset industry. The "Virtual Assets Act, 2025," which aims to regulate and monitor the virtual asset industry, has been officially approved. This law includes provisions for licensing and regulating businesses related to virtual assets, providing a clear framework for the operation of digital financial services. The Act establishes an independent regulator to oversee the industry, ensuring compliance and minimizing risks.

The SBP's mandate remains focused on ensuring smooth interbank market functioning and maintaining ample foreign exchange for trade financing. The SBP's reserves have risen to $14.5 billion from under $3 billion two years ago, a testament to the bank's efforts in this regard.

The IMF's three-year $7 billion programme for Pakistan is on track and has resulted in reforms in fiscal policy, energy pricing, and the foreign exchange market. Inflation in Pakistan has fallen sharply, from 38% in May 2023 to 3.2% in June, and averaged 4.5% for the 2025 fiscal year.

Pakistan's move to explore digital currencies follows similar steps by regulators in China, India, Nigeria, and several Gulf states. The government-backed Pakistan Crypto Council has appointed Binance founder Changpeng Zhao as a strategic adviser, further underscoring Pakistan's commitment to digital finance.

While no direct connection to the digital currency project is mentioned, it is worth noting that Pakistan received a record $38.3bn in remittances in FY25. The SBP's benchmark rate has been reduced from 22% to 11% over the past year, indicating a tight monetary policy that has resulted in a decrease in inflation and improvement in the external account.

President Zardari has given assent to the Virtual Assets Act, 2025, marking a significant milestone in Pakistan's regulatory reforms. The new law will lay down the foundations for the licensing and regulation of the virtual assets sector, paving the way for a more secure and transparent digital financial landscape in Pakistan.

As the SBP gears up to launch its digital currency pilot, the future of Pakistan's financial system looks promising, with a focus on modernization, transparency, and regulatory compliance. Governor Ahmad expressed confidence that after the IMF programme ends in September 2027, Pakistan may not require an immediate follow-up, signaling a new era of financial independence for the country.

1. The integration of digital financial services into Pakistan's financial system is a step forward, as the State Bank of Pakistan (SBP) prepares to launch a central bank digital currency (CBDC) pilot program.
2. The government's regulatory reforms extend to the virtual asset industry, with the "Virtual Assets Act, 2025" being officially approved, providing a clear framework for the operation of digital financial services.
3. In the realm of finance and business, Pakistan's move towards digital currencies such as bitcoin and other cryptos mirrors similar steps taken by regulators in countries like China, India, Nigeria, and several Gulf states.
4. The SBP's focus remains on maintaining smooth interbank market functioning, ensuring ample foreign exchange for trade financing, and managing risks associated with assets and bonds.
5. The IMF's program for Pakistan has led to reforms in fiscal policy, energy pricing, and the foreign exchange market, resulting in a decrease in inflation and improvement in the external account.
6. As technology continues to evolve, the SBP's digital currency project, along with the regulatory framework established by the "Virtual Assets Act, 2025," promises a more secure and transparent digital financial landscape in Pakistan.

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