- SBP has made a package of policy proposals for digital currencies
- This can pave the way for the legalization of crypto, digital rupee, and CBDC
- MPC also announced an interest rate cut of 2.5%, which could provide liquidity
On November 4, SBP announced a package of policy proposals designed to legalize digital assets, which could presumably include cryptocurrency, digital rupee, and CBDC.
The MPC also announced an interest rate cut of 2.5%, which could create more liquidity in the domestic economy and add to the digital asset market if the proposed package is passed.
Details of Pakistan’s Anti-Crypto Policy Reversal
Most recently, Pakistan had an anti-crypto policy, led by Minister of State for Finance and Revenue Aisha Ghaus Pasha. However, with the arrival of Habib Bank Limited CEO Muhammad Aurangzeb in March 2024, followed by more pro-crypto statements.
This has likely been developed in what we are seeing today, namely the outcome of the SBP meeting chaired by SBP governor Jameel Ahmad, the Monetary Policy Committee (MPC), and the announcement of a package of policy proposals for the legalization of digital currencies.
This package still has a way to go if it does happen, and it is likely to be refined and concretized because at the moment a very wide range of digital assets can be classified under it.
More specifically, it could include the legalization of cryptocurrencies and the possibility of direct transactions based on blockchain with the participation of the Central Bank of Pakistan.
But it also creates the possibility of creating a digital rupee and developing and implementing its own CBDC, which is something more and more countries are moving towards.
Of course, this includes not only possible permissions but also limitations, namely the provision of fines for unauthorized digital currency issuers.
However, we know that whether it’s a decentralized blockchain network or a centralized digital CBDC, it’s made possible by the availability of liquidity and another initiative seems to be very compatible with that.
MPC also announced an interest rate cut of 2.5%, giving optimistic estimates of future economic indicators, which could create the very necessary liquidity for the above digital currency initiatives.
According to SAMAA TV:
“Citing a sharp decline in food inflation, favorable global oil prices, and absence of expected adjustments in gas tariffs and PDL rates. Overall, the MPC expects real GDP growth in FY25 to be better than its earlier assessment, while remaining in the range of 2.5 – 3.5 percent.”
Conclusion
We have already commented on how much is actually likely to be done to develop and implement CBDC by different countries, and why it is worth paying crucial attention to it.
And yet, such initiatives could have a very positive impact on Pakistan’s domestic economic health if done right.
However, it is too early to tell and we need to wait for the final package of proposals and its approval to more accurately represent the vector of their initiatives. Stay tuned.
