The National Bank of Pakistan (SBP) has approved a new law on Electronic Money Institutions (EMI).
important point
- SBP plans to launch a CBDC within the next three years.
- The World Bank has helped Pakistan develop new regulations.
- After passage of the new law, the SBP will issue a CBDC-issued license to EMI.
The law targets non-bank entities that provide digital payment instruments and aims to ensure the timely issuance of Central Bank Digital Currencies (CBDC).
CBDC plan in Pakistan
By introducing blockchain technology to power cryptocurrencies, Pakistan joins the list of governments around the world that see CBDCs as a way to enhance the functionality of fiat currencies. Following the launch of the new law, Pakistan aims to launch her CBDC by 2025.
The new law signed by SBP was created with the help of the World Bank.
Essentially, the new law will provide consumer protection and reporting requirements while enabling safeguards against laundering and terrorist financing.
License issued to EMI for CBDC issuance
SBP Bank will issue a license to EMI that will allow EMI to issue CBDCs.
In announcing the launch of the new law, SBP Deputy Governor Jameel Ahmad said:
“These landmark regulations are a testament to SBP’s commitment to openness, technology adoption and the digitization of the financial system.”
Pakistan’s Finance Minister Asad Umar also said that using EMI to facilitate the digital economy could protect financial institutions from cybersecurity threats.
Pakistan’s move towards a CBDC comes after neighboring India recently joined the League of Nations in a race to launch a domestic CBDC, as reported in previous news. The Reserve Bank of India (RBI) has announced that it plans to launch a retail CBDC pilot by the end of 2022.
