Pakistan: Legalization of cryptocurrencies and CBDC – new policy of the State Bank of Pakistan

The State Bank of Pakistan Announces Digital Currency Policy Proposal Package

The State Bank of Pakistan (SBP) has announced a package of policy proposals regarding digital currencies that may pave the way for the legalization of cryptocurrencies, digital rupee, and CBDC. This decision could contribute to boosting liquidity in the market and the domestic economy.

Objective of the Policy Proposal Package

The policy proposal package aims to legalize digital assets, including cryptocurrencies, digital rupee, and CBDC. The proposals were presented during a meeting of the State Bank of Pakistan, chaired by SBP Governor Jameel Ahmad, and the Monetary Policy Committee (MPC).

Shift in Pakistan’s Cryptocurrency Approach

Pakistan’s Finance Minister Aisha Ghaus Pasha had previously pursued an anti-cryptocurrency policy. However, after Muhammad Aurangzeb, the former director of Bank Habib Limited, joined, there have been more pro-cryptocurrency statements heard.

Potential Impact of the Policy Proposal Package

The policy proposal package could be groundbreaking as it potentially legalizes cryptocurrencies, enables blockchain-based transactions involving the State Bank of Pakistan, and introduces the digital rupee and CBDC.

Legislative Process and Consequences

The policy proposal package still requires agreements and may undergo further modifications, including permissions and penalties for unauthorized cryptocurrency issuers. At the same time, the MPC has announced a 2.5% reduction in interest rates to provide the liquidity balance needed for initiatives related to digital currencies.

Forecasts and Economic Impact

The MPC forecasts a decrease in inflation and optimistic real GDP growth indicators for the next year, estimated at 2.5 – 3.5 percent. It is expected that initiatives related to digital currencies could have a positive impact on Pakistan’s economic health. Final proposals must be approved to accurately define the direction of these initiatives.