The State Bank of Pakistan (SBP) has approved new laws for Electronic Money Institutions (EMIs).
KEY TAKEAWAYS
The SBP plans to launch a CBDC within the next three years.
The World Bank helped Pakistan design the new regulations.
After the passing of the new laws, the SBP will issue licenses to EMIs for CBDC issuance.
The laws target non-bank entities offering digital payment instruments and are geared towards ensuring the timely issuance of a central bank digital currency (CBDC).
Pakistan’s CBDC plan
Pakistan joins the list of governments around the world that see CBDCs as a means to enhance fiat capabilities by bringing on board blockchain technology that powers cryptocurrencies. Following the launch of the new laws, Pakistan targets to launch its CBDC by 2025.
The new laws signed tonto place by the SBP were designed with the help of The World Bank.
In essence, the new laws enable prevention measures against laundering and terror financing while also offering consumer protection and reporting requirements.
Issuing licenses to EMIs for CBDC issuance
The SBP bank will be issuing licenses to EMIs to allow them to issue the CBDC.
While announcing the launch of the new laws, Deputy Governor of SBP Jameel Ahmad said:
“These landmark regulations are a testament of the SBP’s commitment toward openness, adoption of technology and digitization of our financial system.”
The Pakistani Finance Minister Asad Umar also said that promoting the digital economy using EMIs will safeguard financial institutions from cybersecurity threats.
Pakistan’s move towards CBDC comes after the neighbouring country India recently joined the League of Nations in the race to launch homegrown CBDCs as reported in our earlier news. The Reserve Bank of India (RBI) announced that it intended to launch a retail CBDC pilot by the end of 2022.