KARACHI: State Bank Governor Reza Baqir on Thursday said the central bank is studying digital currency.
In reply to a question by CNN regarding digital currency in Pakistan, the SBP governor said, “We are studying” and went on to cite financial inclusion, tracking money laundering and counter-terrorism measures as possible benefits.
This is the first time that the SBP has said digital currency is under study. Previously it rejected all digital currencies for trade and payments.
The SBP is closely watching the entry of China in digital currency. China is trying to promote digital currency but central banks of developed countries oppose the move. There are allegations that Beijing wants to dominate the financial world with the digital currency. However, the progress of digital currency in China is still very low.
The financial sector in Pakistan expects a policy on digital currency but is not sure what would be the scope and result of the move.
Digital currency has been a sensitive issue for central banks of the entire world but the recent announcement by Elon Musk — when he tweeted “You can now buy a Tesla with bitcoin” — strengthened it. However, digital currency has yet not taken root in the financial world.
In replay to another question, the SBP governor said that often corruption comes with cash and that’s why Raast (which means ‘direct’) has been adopted to make payments.
Raast has been introduced to keep payment at a faster pace. The module adopted is similar [to the one] in Singapore and other countries, he said. Rasat will help increase the movement of cash through digital way.
Our biggest challenge has been the financial inclusion. Only one in two people have bank and only one in five have bank accounts. The ratio is low compared to the region and in Asia, he said.
Following Covid-19, the State Bank has made quick decisions, he said, adding that targeted facilities has been given from health to construction sectors.
Direct support was given to business several measures were announced; ease in imports has been allowed for machinery and other businesses, the SBP governor said.
Inflation has risen by three per cent in the last three months. Half of this was beyond central bank control, he said, adding that rise occurred due to rise in crude oil prices and electricity prices.
The central bank is keeping a close eye on inflation, he said. The bank is also keeping a close eye on the exchange rate. He said currently the rupee is the second best currency in the world.
He said the central bank would maintain an accommodative interest rate policy. The central bank has kept the interest rate unchanged at 7 per cent about a year.
During the Covid-19, we promoted interbank transfers and because of this step the growth in mobile banking surfaces and the transfer through electronically shows growth of 150 to 200pc, he added.
Published in Dawn, April 10th, 2021