The State Bank of Pakistan has announced plans to launch the country’s first-ever digital currency. It aims to improve financial inclusion and reduce the reliance on cash transactions.
Governor of State Bank of Pakistan Jameel Ahmad said Pakistan is working on launching the country’s first-ever digital currency. The Chairman of Senator Saleem in the Parliament House, the SBP governor, said in the meeting the central banks are piloting digital currencies. However, the SBP is trying to learn from the experience.
He further said the state bank is currently busy reviewing and understanding the efforts of other central banks. They have successfully created their digital currencies. Moreover, the State Bank will be careful about launching a Central Bank Digital Currency.
Meanwhile, In the meeting the regulations provide for different types of digital bank licenses, a constitutional model, minimum eligibility criteria, sponsors, directors and CEO competence. The proposed configuration includes licensing guidelines and complementary rules for digital banks.
In addition, abundant countries have their Digital Currency. And more than 100 countries plan to launch Digital Currency in State Bank. The introduction of a State Bank Digital Currency could bring benefits to Pakistan. The main benefits are reduced costs, increased efficiency, transparency, and ease of digital payments and remittances.
Digital Banks
A digital bank primarily serves customers through digital channels, without physical branches in traditional banks. Digital Retail Banks cater to retail customer segments, including individuals, SMEs, micro, and agriculture entities, while DFBs deal with corporate, commercial, and retail customer segments.
A traditional bank with one year of experience in retail Digital Financial Solutions can apply. However, they can apply individually or with other equity participants. International banks with a successful track record of three years can also apply.
An EMI seeking conversion into a DRB must have at least one year of experience. Those holding a majority stake in a microfinance bank, EMI, international bank, or international DFS entity can apply individually or with other equity participants. Any person or entity with three years of experience in digital or innovative financial and non-financial domains can apply to form a DRB with a minimum of five per cent equity.