Govt to introduce digital currency to bolster Rupee stability

KARACHI: In a strategic move aimed at curbing currency printing and distribution expenditures, the government has announced plans to launch digital currency.

The introduction of digital currency is expected to contribute to the appreciation of the Pakistani rupee’s value while simultaneously enhancing economic prospects and streamlining financial transactions, according to The News.

The digital currency’s value will mirror that of the Pakistani rupee, akin to the Chinese digital currency, where one unit is equivalent to one Chinese Yuan.

The State Bank of Pakistan (SBP) is actively supporting this initiative, ensuring that the Pakistani digital currency is issued with the government’s guarantee, much like traditional currency notes. To realize this vision, the SBP has engaged experts to oversee the process.

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A specialized entity, the Central Bank Digital Currency, is currently conducting a comprehensive cost-benefit and feasibility analysis to ensure smooth digital currency transactions upon its launch.

The government’s objective is to gradually phase out currency notes in favor of digital currency while maintaining an 80:20 ratio between digital currency and physical notes. This measure serves as a contingency plan, ensuring the availability of currency notes in unforeseen circumstances.

Apart from the evident cost savings related to currency printing, distribution, and the disposal of old notes, every digital currency transaction will be meticulously documented, thereby facilitating effective enforcement of monetary policies.

Digital currency is poised to revolutionize cross-border trade and investment and extend financial services to the unbanked population. Furthermore, it holds the potential to enhance the efficiency, resilience, and reliability of the financial industry, as endorsed by the World Bank. It’s worth noting that blockchain technology is one form of distributed ledger with significant implications for the digital currency landscape.