Pakistan is taking a major step toward a fully digital financial system with the State Bank of Pakistan (SBP) initiating the pilot phase of its central bank digital currency (CBDC). The move represents not just a new channel to transfer money but the introduction of a sovereign digital currency issued directly by the central bank. Officials have highlighted that while RAAST, Pakistan’s real-time payment system launched in 2021, has handled over Rs 8 trillion worth of transactions and facilitated more than 160 million transfers across bank accounts and wallets, CBDC goes further by representing the money itself rather than serving merely as a payment rail. With mobile phone penetration exceeding 82 percent and an estimated remittance inflow of $38.3 billion projected for fiscal year 2024-25, Pakistan is positioned to use its CBDC to enhance financial inclusion, cut transaction fees, digitize welfare payments, and integrate millions of unbanked citizens into the formal economy.
The economic consequences of adopting CBDC include balancing high short-term infrastructure expenditure against long-term gains in efficiency, inclusion, and transparency. The SBP’s 2022-23 annual report noted that Pakistan spends over Rs 28 billion annually on cash-management-related activities such as printing, processing, distribution, ATM maintenance, and storage, despite cash accounting for about 62 percent of transaction volume as of mid-2023. By shifting to a programmable digital rupee stored in secure mobile wallets, the central bank aims to significantly reduce these costs and replace a substantial portion of physical money with digital legal tender.
Traditional payment channels remain costly and time-consuming. ATM withdrawals in Pakistan carry a service fee of Rs 20–23 per transaction, and cheque clearing can take up to two business days, complicating liquidity management and cash flow for individuals and businesses. According to the World Bank’s 2021 Global Findex report, more than 100 million Pakistani adults do not use any financial services, illustrating the limitations of the traditional system. CBDC could address these gaps by enabling instant, low-cost transactions via QR codes or phone numbers and making government-related payments, such as taxes and fees, directly through mobile wallets.
The legal foundation for Pakistan’s CBDC was laid by the Digital Currency Regulatory Framework (DCRF) Act of 2024, which authorized the SBP to issue digital legal tender while mandating strict cyber security and data privacy standards and establishing digital banking licensing. Complementing this is the government’s 2025 Virtual Assets Act, which created the Pakistan Virtual Asset Regulatory Authority (PVARA). PVARA is tasked with overseeing the virtual asset ecosystem, including cryptocurrencies, tokenized assets, and other digital financial products, with powers to license service providers, enforce anti-money-laundering and know-your-customer requirements, and establish transparency and accountability in the digital asset market. This aligns Pakistan with international standards set by bodies such as the Financial Action Task Force (FATF) and mirrors efforts by regulators like Singapore’s Monetary Authority and the UK’s Financial Conduct Authority.
Among the pilot projects under consideration are direct payments of social safety net programs such as BISP and Ehsaas via CBDC wallets, programmable utility payments, and cross-border remittance corridors that could channel some of the estimated $8 billion annual informal remittance outflow into formal channels. International examples such as Nigeria’s eNaira, China’s Digital Yuan pilot, and the Bahamas’ Sand Dollar demonstrate how central bank digital currencies can streamline government-to-person payments, reduce leakages, and extend financial services to previously inaccessible populations.
The CBDC rollout also supports Pakistan’s URAAN project, particularly its E-Pakistan pillar focused on digital governance and inclusion. By offering digital cash accessible via mobile phones, CBDC could bridge financial access gaps, reduce the informal economy’s size, and enhance tax transparency, echoing the United Nations Development Programme’s view that digital currencies can accelerate economic development and advance the Sustainable Development Goals by integrating marginalized populations into the formal financial system.
For ordinary Pakistanis, especially daily-wage earners, shopkeepers, and small-business owners with basic mobile phones, CBDC wallets could become their first entry point into formal finance, enabling them to receive welfare, pay utilities, start savings, and transact securely without a traditional bank account. While Pakistan faces significant costs in developing CBDC infrastructure, including cyber security safeguards and institutional reforms, the potential benefits are transformative: drastically reduced cash handling costs, faster and cheaper payments, greater inclusion of unbanked populations, and improved government accountability. The CBDC is not intended to replace existing systems like RAAST immediately but to complement them, together forming a resilient digital financial architecture essential for Pakistan’s economic modernization.