Pakistan Passes New Legislation To Speed Up The Establishment Of CBDCs By 2025

The State Bank of Pakistan enacted new legislation for Electronic Money Institutions (non-bank businesses that provide digital payment instruments) to ensure the timely issue of a CBDC within the next three years.

Central bank digital currencies (CBDCs) are seen by regulators throughout the world as a method to improve fiat capabilities by inheriting the financial expertise of the technology that fuels cryptocurrencies. Pakistan has joined this list by adopting new legislation to ensure the establishment of a domestic CBDC by 2025.

The State Bank of Pakistan (SBP) has enacted new regulations requiring Electronic Money Institutions (EMIs)—non-bank businesses that offer digital payment instruments—to issue a CBDC within three years. According to local media outlet Arab News, the World Bank assisted Pakistan in developing the new regulations.

In addition to meeting the CBDC's debut deadline, the laws call for preventative measures against money laundering and terror funding, as well as consumer protection and reporting obligations.

The SBP will grant licenses to EMIs for CBDC issuance. Finance Minister Asad Umar remarked at the launch that employing EMIs to promote the digital economy will protect financial institutions from cybersecurity dangers. Through CBDCs, SBP Deputy Governor Jameel Ahmad hopes to reduce fiat-induced corruption and inefficiency. He said: “These landmark regulations are a testament to the SBP’s commitment toward openness, adoption of technology, and digitization of our financial system.”

With the establishment of a rapid regulatory environment, Pakistan joins the nearly 100 countries that are actively engaged in researching and launching CBDC initiatives.

India, a neighboring country, has lately joined the battle to establish a domestic CBDC. The Reserve Bank of India (RBI) announced an ambitious plan to launch a retail CBDC pilot by the end of 2022 on November 22.

The Indian central bank, RBI, is reportedly nearing completion of the retail digital rupee pilot rollout, which will be tested initially among 10,000 to 50,000 users of participating banks.

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