Central Bank Digital Currency (CBDC) in Pakistan

Abstract

This chapter explores the implications and prospects of Central Bank digital currencies (CBDC) in Pakistan, focusing on its potential to transform the financial ecosystem. The emergence of blockchain and distributed ledger technologies has incited significant interest in digital currencies, leading central banks worldwide to research and develop CBDCs. In Pakistan, the implementation of CBDC presents opportunities for modernizing the financial infrastructure, enhancing financial inclusion, and fostering economic growth. The study employs a mixed-method approach, integrating qualitative and quantitative analyses. It examines the types of CBDCs, namely wholesale and retail, and their potential impacts on payment safety and efficiency. A thorough literature review provides insights into the multifaceted consequences of CBDCs on payment systems, monetary policy, and financial stability. Additionally, the research explores the challenges of CBDC implementation in Pakistan, including cybersecurity risks, technological limitations, and potential threats to financial stability. The findings highlight the need for comprehensive research, international collaboration, and a robust regulatory framework to mitigate risks and maximize the benefits of CBDCs. This study contributes to the ongoing discourse on digital currencies and their role in shaping the future of money and banking in emerging economies like Pakistan.