Muhammad Faheem
In a groundbreaking move, Pakistan is set to introduce its own digital currency, following in the footsteps of several other nations. This strategic decision not only aims to reduce the heavy costs associated with printing the physical currency but also promises to unveil concealed wealth held by investors.
The State Bank of Pakistan is spearheading this initiative, designed to tackle the issue of black money, enhance the value of the Pakistani rupee, and facilitate various types of digital payments, drawing inspiration from China's successful digital currency model. Similar to China's digital yuan, Pakistan's digital currency will be pegged to the Pakistani rupee and will receive full backing from the State Bank.
Mansoor Afridi, a former Deputy Director of the State Bank of Pakistan and ex-Vice President of the Muslim Commercial Bank, emphasizes the significance of this endeavor, heralding it as a potential game-changer. He notes that the State Bank has been diligently working on this project for an extended period, drawing upon the experiences of more advanced countries in the realm of digital currencies.
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Afridi highlights the substantial financial burden associated with paper currency, including the costs of production, transportation, and security. Transitioning to a digital currency promises to alleviate these financial strains. Moreover, he underscores that citizens across the country have stashed away black money, and the introduction of digital currency will eliminate the possibility of concealing such wealth. All transactions will be meticulously recorded, and accessible through a digital application, ensuring complete transparency for the government.
The Government of Pakistan has clarified that the digital currency will be underwritten by a government guarantee, akin to paper currency. The State Bank has already initiated preparations for the digital currency and is enlisting the expertise of specialists in this endeavor. A dedicated body known as the Digital Currency Authority has been established to meticulously assess the costs and various factors involved in the digital currency's implementation, ensuring a seamless transition with minimal hiccups or glitches.
However, Dr. Sohail Ahmed, a telecommunications engineer, raises concerns about the practicality of implementing digital currency in Pakistan. He contends that the nation faces significant challenges in terms of internet accessibility. While the government envisions transactions occurring through a digital application, the reliability of this approach depends on internet connectivity, which is often inconsistent or absent in various regions across Pakistan. To overcome this hurdle,
Dr. Ahmed emphasizes the urgent need for the government and telecommunications authorities to prioritize the rollout of 5G technology, ensuring widespread access to high-speed internet before digital currency can be deemed successful.
According to government sources, the transition to digital currency will occur gradually, with a reduction in the ratio of digital currency to paper currency. Over the next five years, the government aims to shift the currency landscape towards a composition of 90% digital currency and 10% physical notes, fostering a modernized and more efficient economic ecosystem across the nation.
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