SBP to launch first-ever digital currency

KARACHI: State Bank of Pakistan (SBP) is set to launch the pilot of the country’s first digital currency within two months following the completion of the required groundwork.

Speaking to a media outlet, Deputy Governor Sima Kamil said the groundwork of the digital currency has been completed and the SBP will run a pilot that is called ‘sandbox’  to carefully examine it.

She said the ‘sandbox’ will be launched in a couple of months, referring to a controlled environment provided for testing innovative products, services, or business models.

Central bank digital currencies (CBDCs) are digital versions of cash that are issued and regulated by state-owned banks. The currencies are built on blockchain technology (DLT) and are intended to provide a secure and efficient means of conducting digital transactions.

Ms Kamil added that the launch of the digital currency was part the five-year strategy, while the central bank has been researching options for its own digital currency.

The deputy governor said the CBDCs have been launched by a handful of countries so far while other countries and central banks are examining them.

Pakistan has been studying the options of launching digital currency since 2019 with the launch of laws for electronic money institutions (EMIs).

However, the deputy governor of SBP clarified that CBDCs are different from cryptocurrencies, which has been banned in Pakistan since 2018. She added that CBDCs were different from cryptocurrencies as they will be considered the central bank’s legal tender currency.