Regulators worldwide see central bank digital currencies (CBDCs) as a way to enhance fiat capabilities by inheriting the financial prowess of technologies that power cryptocurrencies. Pakistan joined this list by announcing new regulations to ensure the launch of an in-house CBDC by 2025.
The State Bank of Pakistan (SBP) signed in new laws for Electronic Money Institutions (EMIs) — non-bank entities offering digital payment instruments — to ensure the timely issuance of a CBDC in the next three years. The World Bank helped Pakistan design the new regulations, according to local media Arab News.
In addition to timeline adherence for the CBDC launch, the regulations warrant preventive measures against money laundering and terror financing while considering consumer protection and reporting requirements.
The state bank, SBP, will issue licenses to EMIs for CBDC issuance. During the announcement, Finance Minister Asad Umar stated that using EMIs in promoting the digital economy will safeguard financial institutions from cybersecurity threats. Deputy Governor of SBP Jameel Ahmad envisions curbing fiat-induced corruption and inefficiency through CBDCs. He said:
“These landmark regulations are a testament of the SBP’s commitment toward openness, adoption of technology and digitization of our financial system.”
The commencement of a speedy regulatory environment places Pakistan among the nearly 100 countries that are actively involved in researching and launching CBDC initiatives.
Neighboring country India also recently joined the race to launch a home-grown CBDC. On Nov. 22, The Reserve Bank of India (RBI) announced an ambitious plan to launch a retail CBDC pilot by the end of 2022.
Indian central bank, RBI, is reportedly in the final stage of preparing the retail digital rupee pilot rollout, which will be initially tested among 10,000 to 50,000 users of participating banks.