The government has opted to introduce a digital currency as a strategic move aimed at reducing expenses associated with currency printing and distribution.
According to The News, this digital currency initiative is expected to contribute to the appreciation of the rupee’s value, bolster the overall economy, and facilitate extensive financial transactions.
Much like the Chinese digital currency, where one unit is equivalent to one Chinese Yuan, the value of this digital currency will be pegged to the Pakistani rupee. The State Bank of Pakistan (SBP) will be the driving force behind this endeavour, offering government-backed guarantees similar to traditional currency notes. The SBP has already begun its efforts, enlisting the expertise of professionals for its development.
To oversee this transformation, a specialised department known as the Central Bank Digital Currency has been established. This department is diligently assessing the cost benefits and feasibility of the digital currency to ensure seamless transactions upon its launch.
The government’s objective is to gradually replace physical currency notes with digital currency while maintaining an 80:20 ratio, allowing currency notes to coexist as a backup in unforeseen circumstances.
The adoption of digital currency will also yield significant savings by eliminating the expenses associated with printing, distributing, and disposing of physical notes. Additionally, every digital transaction will be meticulously documented, enhancing the effectiveness of monetary policy enforcement.
Furthermore, digital currency holds substantial potential for advancing cross-border trade and investment and extending access to financial services for the unbanked population. The World Bank acknowledges its potential to enhance the financial industry’s efficiency, resilience, and reliability, with blockchain technology serving as one of the pivotal distributed ledger technologies supporting these advancements.