SBP to launch first-ever digital currency

The State Bank of Pakistan (SBP) plans to introduce the country's inaugural digital currency in the next two months after completing the necessary groundwork.

Deputy Governor Sima Kamil confirmed that the groundwork for the digital currency has been finalized, and the SBP will initiate a pilot program referred to as a 'sandbox' to conduct thorough testing. The sandbox, which provides a controlled environment for testing innovative products, services, or business models, will be launched in the coming months. Central bank digital currencies (CBDCs) are regulated and issued by state-owned banks and serve as digital versions of cash. These currencies leverage blockchain technology (DLT) and offer a secure and efficient means of conducting digital transactions.

As part of a five-year strategy, the SBP has been exploring options for its own digital currency, and CBDCs have already been launched by a few countries, with others currently examining them. Pakistan has been studying the possibility of introducing a digital currency since 2019, coinciding with the enactment of legislation for electronic money institutions (EMIs). However, it is crucial to note that CBDCs differ from cryptocurrencies, which have been prohibited in Pakistan since 2018. CBDCs, unlike cryptocurrencies, will be recognized as the central bank's legal tender currency.