ISLAMABAD: Pakistan is moving closer to launching a digital rupee, as regulators sound alarm bells over the growing use of dollar-pegged stablecoins that could undermine the country’s monetary sovereignty.
According to reports, the State Bank of Pakistan (SBP) is in the proof-of-concept phase for a Central Bank Digital Currency (CBDC) — a digital version of the Pakistani rupee — in an effort to counter the creeping “crypto-dollarisation” taking root in the economy.
Experts warn that the increasing popularity of stablecoins, digital currencies pegged to the US dollar, could weaken the central bank’s control over monetary policy. By allowing people to transact and save in dollar-backed assets instead of rupees, Pakistan risks a silent shift toward foreign currency dependence — this time in digital form.
The SBP’s move comes at a time when personal remittances, accounting for nearly 9.4 percent of Pakistan’s GDP in 2024, are increasingly flowing through informal and crypto-based channels. Regulators now aim to bring such digital transactions under the SBP’s payment network — including RAAST, the national instant-payment system — to ensure oversight and transparency.
Economists believe that while the digital rupee could modernize Pakistan’s payments landscape, its success will depend on how effectively it competes with stablecoins that already offer faster, cheaper global transfers. The SBP faces the challenge of not just creating a secure and efficient CBDC, but also restoring public trust in the rupee amid ongoing inflation and currency volatility.
The article also highlights that emerging markets like Pakistan, which maintain strict foreign exchange controls, must ensure that any access to digital dollars remains in compliance with national regulations — a task made complex by the borderless nature of crypto transactions.
For now, the SBP’s digital-currency initiative signals a strategic effort to preserve Pakistan’s monetary independence and reduce reliance on dollar-based crypto instruments. Yet, the real test lies ahead — in winning public adoption and balancing innovation with regulation.
This story has been reported by PakTribune. All rights reserved.