Pakistan in 2025 is standing at an unusual financial crossroads. On one side lies a stubbornly cash-driven economy where millions of people remain unbanked, where wages in small industries are still distributed in banknotes, and where women and rural communities are often left out of the digital sphere altogether. On the other side is a global financial environment in which central bank digital currencies have moved from theory to experiment, and in some cases to reality. The State Bank of Pakistan, long cautious and ambiguous in its public stance, is now prepared to test its own digital rupee. The announcement that the country will partner with Soramitsu, a Japanese company with an established track record in digital currencies, represents more than a technological project. It is a political, social, and economic experiment in trust, inclusion, and sovereignty.
The story of Pakistan’s digital rupee cannot be understood without acknowledging the conditions that led here. Inflation has eroded the public’s confidence in money, informal cash channels dominate remittances, and state capacity to supervise fast-evolving financial technologies has lagged. Yet Pakistan is not an outlier in facing these challenges. India has tested its digital rupee with measured success, China has poured resources into the e-CNY with limited public enthusiasm, Nigeria has struggled with low uptake of its e-Naira, while smaller nations like the Bahamas have deployed CBDCs to increase resilience. Pakistan therefore enters this terrain not as a pioneer but as a late mover who can learn from others’ mistakes while tailoring its experiment to its own context.
The international record on CBDCs offers Pakistan both encouragement and warning. China’s e-CNY proves that even when a state rolls out digital money at scale, adoption cannot be assumed. Despite billions in transactions and millions of wallets, the average Chinese citizen still prefers Alipay or WeChat Pay, platforms that already offer speed, convenience, and social integration. The lesson here is not that CBDCs are doomed, but that their success depends on addressing a specific gap or offering a clear value proposition. If Pakistan’s digital rupee is simply a mirror of Raast or of telecom wallets, it will struggle to attract users. It must instead provide unique functions, such as secure offline transactions in rural areas, guaranteed Shariah compliance, or zero-fee usage for basic services.
India’s experience stands as a more structured model. By deliberately separating wholesale and retail pilots, the Reserve Bank of India created space to test settlement efficiency in interbank transfers while simultaneously experimenting with public adoption in limited settings. The Indian pilot has also benefited from a supportive regulatory framework, active involvement of major banks, and careful communication. For Pakistan, adopting this phased and segmented approach may be wiser than rushing to demonstrate quick results.
Nigeria’s struggles remind us of the dangers of misalignment. The e-Naira faced skepticism because it did not solve obvious problems for citizens, and merchants saw little incentive to adopt it. Public suspicion of government motives compounded the problem. Pakistan shares some of these vulnerabilities. If the digital rupee is framed as a surveillance tool or as a fragile instrument backed by a weak currency, adoption will be minimal. Clear communication and strong privacy guarantees must therefore be built into the rollout.
Finally, the experiences of the Bahamas and Eastern Caribbean show that in smaller, more fragile economies, CBDCs can succeed if linked to resilience goals such as disaster response. While Pakistan is not a small island nation, it is a climate-vulnerable country regularly hit by floods and infrastructure disruptions. A digital rupee capable of functioning offline during crises could have immense value in ensuring continuity of payments and aid distribution.
To situate the digital rupee, one must understand Pakistan’s financial system. The story is one of partial modernization amid persistent gaps. Raast has transformed instant low-value transfers, offering interoperability across banks and wallets at minimal cost. Telecom-led wallets have onboarded tens of millions, and digital payments are increasingly visible in urban commerce. Yet, despite these gains, Pakistan remains a cash society. The gender gap in account ownership is among the highest in the region, rural areas lack basic merchant infrastructure, and trust in digital finance is weak. Fraud incidents, opaque fee structures, and poor customer recourse have left scars.
The new Virtual Assets Act of 2025 is intended to provide legal clarity. It defines digital assets, establishes licensing frameworks, and distinguishes state-issued CBDCs from private cryptocurrencies. This legal recognition matters, because the State Bank cannot simply issue digital tokens without ensuring they are embedded in a coherent regulatory system. Still, questions remain unresolved: will the digital rupee be explicitly designated legal tender? Will consumer disputes be handled by SBP, commercial banks, or a separate tribunal? What liability will intermediaries bear if wallets fail or if fraud occurs? These questions will matter as much as technological design.
Above all, trust remains the key. Pakistanis have lived through repeated currency devaluations, inflationary cycles, and financial scandals. To many, digital promises sound hollow unless backed by clear assurances of safety and compliance with religious principles. For this reason, the design of the digital rupee cannot ignore Shariah considerations. Non-interest-bearing balances, clarity on penalties, and Shariah-based liquidity management must be explicit. A Shariah advisory board should accompany the pilot from its inception, not as an afterthought.
The announcement of a partnership with Soramitsu transforms Pakistan’s CBDC project from aspiration to reality. Soramitsu is best known for Bakong, Cambodia’s blockchain-based payment system that integrated commercial banks, enabled QR-based retail transactions, and incorporated offline functionalities. Pakistan’s needs are similar but scaled to a much larger and more fragmented economy. The Japanese government’s support through its Global South Future-Oriented Co-Creation initiative further adds a diplomatic dimension, positioning Pakistan not only as a technology adopter but also as part of a broader strategic alignment with Japan.
The pilot will reportedly focus on three corridors: government-to-person transfers, rural merchant payments, and government collections of fees and levies. Each corridor addresses a different gap. For social transfers such as BISP or Ehsaas, a digital rupee can reduce leakage, improve traceability, and provide beneficiaries with secure access. For rural merchants, offline smartphone-to-smartphone transactions could overcome connectivity barriers and bring small businesses into the digital fold. For government collections, digital payments could improve revenue transparency and reduce petty corruption.
Yet the risks are substantial. Cybersecurity must be hardened against state and non-state actors. Offline transactions carry risks of double spending unless carefully capped and reconciled. Banks may fear deposit flight if digital rupee wallets are too attractive. Merchants may resist if fees are introduced too early or if onboarding is cumbersome. For these reasons, the pilot must be modest in scope, transparent in evaluation, and open to course correction. SBP would be well advised to publish a pilot handbook detailing principles, privacy safeguards, dispute resolution mechanisms, and reporting metrics.
At the design level, Pakistan is likely to adopt a two-tier architecture in which SBP issues the digital rupee while banks, fintechs, and EMIs handle wallets, onboarding, and customer service. This distributes operational responsibilities and avoids the perception that the central bank is competing directly with the private sector. A hybrid of token and account models could enable both offline cash-like transactions and online compliance with AML/CFT rules. Tiered KYC, with low caps for simplified wallets and higher thresholds for fully verified accounts, will be crucial for balancing inclusion with risk management.
The digital rupee’s journey will be neither linear nor smooth. The initial pilot may face glitches, public skepticism, and resistance from entrenched players. Yet, if treated as an experiment rather than a foregone success, it could generate insights of immense value. The lessons from China, India, Nigeria, and the Caribbean are clear: adoption requires solving real problems, not simply rolling out technology. For Pakistan, those problems are inclusion, trust, resilience, and Shariah legitimacy. If the pilot demonstrates progress on these fronts, it could pave the way for broader rollout. If it fails, it will at least provide clarity on what does not work.
What matters most is not whether Pakistan joins the global list of CBDC adopters, but whether it does so in a way that strengthens rather than weakens its financial system. A poorly executed CBDC could destabilize banks, expose citizens to new risks, and deepen mistrust. A carefully designed and modest pilot, by contrast, could demonstrate the art of prudent innovation. The partnership with Soramitsu offers technical credibility, but the responsibility rests with Pakistan’s own institutions to build the trust, resilience, and inclusion that will determine the fate of its digital rupee.
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