Pakistan is the world’s 5th largest remittance destination. The question is how much further it can climb.

Remittance flows are Pakistan’s most reliable source of hard dollars. Last year alone, we received more than $38 billion, the highest in our history. In many years, these flows have been steadier than exports, foreign direct investment, or debt inflows combined. As imports continue to gnaw at dollar reserves, these inflows are even more critical.

So how do we increase remittance flows?

By acting on a simple fact: people send more when it is easier and cheaper.

Remittances could be converted into dollar stablecoins, bridged into the Pakistani CBDC’s network, exchanged at market rates, and redeemed into rupees via Raast

One promising way is to use crypto-based settlement technology as the rails or plumbing. It’s like upgrading from dial-up internet to broadband: transfers become near-instant, run 24/7, and fees can fall below one per cent. More of each dollar arrives home.

The main way to enable all this is through stablecoins.

Stablecoin 101

A stablecoin is a crypto token where, for every stablecoin that exists, there is $1 deposited in a dedicated bank account tied to that token. When money goes into that account, more tokens are issued or “minted”. When money goes out, as many tokens are deleted or “burned”. In short, the tokens track the fiat backing one-to-one.

Although dollar variants are most popular, stablecoins can be backed by other currencies too: dirhams, euros, and potentially rupees.

Note that stablecoins do not increase the money supply. They are only a different format of money, with two added properties: programmability (rules can be coded into it) and 24/7 availability (always-on).

Those properties make stablecoins highly effective for speeding up remittances.

Two paths, and a practical middle

Overall, there are three ways to upgrade remittances through stablecoins.

At one end is the “simplest” approach. Imagine a Pakistani expat sends dollar-based stablecoins to Pakistan. Those stablecoins are converted into fiat dollars and settled into a Pakistani bank’s nostro account. To make the payment instant, the recipient is paid out from a pre-funded rupee account in Pakistan, while dollar settlement catches up in the background.

This works, but has downsides. It serves only people sending remittances in crypto. It also keeps the old pre-funding model alive, meaning trapped capital and exposure to foreign exchange swings.

Another way to upgrade remittances is via a Central Bank Digital Currency (CBDC).

Once a CBDC is launched, this is how the plumbing works: each remittance is converted into dollar stablecoins, bridged into the Pakistani CBDC’s network, exchanged into the CBDC at market rates, and redeemed into rupees via Raast. Accumulated dollar stablecoins are also periodically unwound back into fiat, repatriating hard dollars for our reserves.

But a CBDC requires years of build-out: new infrastructure, wallets, governance, security, upgrades, and mass adoption. It’s an exercise in building and maintaining a sovereign digital financial ecosystem from scratch. Countries spend years and remain in pilots.

Thus, it is wiser to pursue a faster path, alongside longer-term CBDC ambitions.

The most efficient way to upgrade inward remittances is to use established blockchain settlement rails and pilot a rupee-backed token on them. It can start as a permissioned, custodial instrument limited to licensed participants.

To be sure, this is much smaller than launching a CBDC. It can be tested quickly and cheaply. It can interoperate with the American dollar, Canadian dollar, euro, dirham, or pound stablecoins from day one, boosting compatibility with global money flows.

What about control?

Stablecoins are often assumed to be hard to control. But in practice, they can be tightly controlled because they are programmable.

For the narrow use-case of inward remittances, a PKR-backed token need not be an open retail instrument. The safest way is a fully custodial token designed for one purpose: regulated remittance settlement.

Key guard rails can be enabled from the start: per-user limits, strict whitelisting of institutions, strong anti-money laundering and counter-financing terrorism checks at entry and exit, the ability to freeze or claw back suspicious funds, and emergency pause mechanisms (for example, during exchange-rate volatility).

Next steps

A “crawl, walk, run” approach is best. The first step can be a sandbox pilot focused on a single high-profile corridor, such as New York to Pakistan. We can stress-test inward remittances from New York over six to 18 months. Troubleshoot teething pains along the way. Scale gradually as operational stability is established.

Once integrated, this system will ultimately become the long-lived financial plumbing for Pakistan. So as the country explores stablecoin-based remittances, it must choose technology partners wisely.

Partners should be vetted for resilience to geopolitics and sanctions, and for a strong record of global regulatory compliance. This is of strategic consequence in an increasingly divided world.

For immediate gains at modest cost, stablecoin rails are the most practical way to modernise the country’s remittance machinery. They let us test quickly, gather evidence, and upgrade infrastructure without committing billions or waiting years.

Published in Dawn, The Business and Finance Weekly, January 5th, 2026