KARACHI/ SINGAPORE: Pakistan’s central bank is preparing to launch a pilot for a digital currency and is finalising legislation to regulate virtual assets, Governor Jameel Ahmad said on Wednesday, as the country ramped up efforts to modernise its financial system.
Central banks globally are exploring the use of digital currencies as interest in blockchain-based payments grows. Pakistan’s move follows similar steps by regulators in China, India, Nigeria and several Gulf states to test or issue digital currencies through controlled pilot programmes.
At the Reuters NEXT Asia summit in Singapore, Ahmad said Pakistan was “building up our capacity on the central bank digital currency” and hoped to roll out a pilot soon.
He was speaking on a panel alongside Sri Lanka’s central bank governor P Nandalal Weerasinghe, with both discussing monetary policy challenges in South Asia.
Ahmad said a new law would “lay down the foundations for the licensing and regulation” of the virtual assets sector and that the State Bank of Pakistan (SBP) was in touch with some tech partners.
The move builds on efforts by the government-backed Pakistan Crypto Council, set up in March to drive virtual asset adoption. The PCC is exploring bitcoin mining using surplus energy, has appointed Binance founder Changpeng Zhao as a strategic adviser and plans to establish a state-run bitcoin reserve.
It has also held talks with US-based crypto firms, including the Trump-linked World Liberty Financial.
In May, the SBP clarified that virtual assets were not illegal. However, it advised financial institutions not to engage with them until a formal licensing framework was in place.
“There are risks associated, and at the same time, there are opportunities in this new emerging field. So we have to evaluate and manage the risk very carefully, and at the same time not allow to let go the opportunity,” he said on the panel.
Ahmad said the central bank would continue to maintain a tight policy stance to stabilise inflation within its 5–7 percent medium-term target.
Pakistan has cut its benchmark rate from a peak of 22 percent to 11 percent over the past year, as inflation slumped from 38 percent in May 2023 to 3.2 percent in June, averaging 4.5 percent in the 2025 fiscal year just ended, a nine-year low.
“We are now seeing the results of this tight monetary policy transfer, both on our inflation as well as on the external account,” he said.
The SBP governor said Pakistan was not overly exposed to dollar weakness, noting its foreign debt was mostly dollar-denominated and only 13 percent comprised Eurobonds or commercial loans. “We don’t see any major impact,” he said, adding that reserves had risen to $14.5 billion from under $3 billion two years ago.
Ahmad said Pakistan’s three-year $7 billion IMF programme, which runs through September 2027, was on track and had resulted in reforms in fiscal policy, energy pricing and the foreign exchange market. “We are confident that after that (IMF programme), maybe we will not require an immediate (follow-up).”
Asked whether Pakistan had financing plans lined up for upcoming military equipment purchases, particularly imports from China, Pakistan’s central bank governor said he was not aware of such plans.
Meanwhile, the Government of Pakistan has formally approved the “Virtual Assets Act 2025,” following endorsements from the federal cabinet, the prime minister and the president.
The law establishes the Pakistan Virtual Asset Regulatory Authority (PVARA), an autonomous federal body empowered to license, regulate and supervise entities dealing in virtual assets. The authority has been granted comprehensive powers to ensure transparency, compliance, financial integrity and the prevention of illicit activities, in alignment with international standards including those of the Financial Action Task Force (FATF).
Under the Act, any person or company intending to offer virtual asset services in or from Pakistan must be licensed by the authority. A structured licensing regime will be introduced, with specific requirements for incorporation, operational capacity, compliance frameworks and reporting obligations.
Meanwhile, remittances to Pakistan reached a record high in the fiscal year ended June 2025, as the country received $38.3 billion from its citizens employed abroad, an annual increase of 26.6 percent, data from the central bank showed on Wednesday.
In June, Pakistan received $3.4 billion in remittances from its overseas workers, representing a 7.9 percent increase from $3.1 billion in June 2024. However, there was an 8 percent decline in remittance inflows compared to the previous month.
The surge in remittances has helped strengthen the country’s foreign exchange reserves and enhance external buffers. This rise has allowed the country to surpass its $38 billion remittance target set for FY25, even exceeding its export earnings.
The SBP’s forex reserves increased by $5.12 billion to $14.51 billion in FY25. This amount is now nearly five times higher than the low levels seen at the beginning of 2023. Additionally, Pakistan’s exports rose 4.67 percent to $32.1 billion in FY25, according to the latest data from the Pakistan Bureau of Statistics.
Hussain Haider, the chief investment officer at JS Investments, said that FY25 has reaffirmed, as in previous years, that remittances remain a vital pillar of Pakistan’s balance of payments.
“This year’s growth ranks among the highest in our history and has fortunately arrived at a crucial time, given the recent slowdown in export growth,” Haider said.
He noted that the strong performance in remittances in FY25 is a result of a combination of exchange rate stability, formalisation, regulatory measures, the development of digital platforms, and an increase in charitable giving during festive seasons.
The average monthly remittances for FY25 stood at approximately $3.19 billion, higher than the average of $2.52 billion in the previous year.
Mohammad Sohail, the CEO of Topline Securities, wrote on X that, alongside Pakistan, Bangladesh also experienced record remittance inflows of $30 billion—an increase of 26 percent. These remittances have provided substantial support for both economies, helping to bridge external gaps and boost household incomes.
Analysts said that the over $8 billion rise in annual remittances during the last fiscal year exceeds the total funding of the entire IMF bailout. Pakistan’s three-year, $7 billion IMF loan programme, which extends through September 2027, is progressing well, according to SBP Governor Jameel Ahmad. This programme has initiated reforms in fiscal policy, energy pricing, and the foreign exchange market.
Prime Minister Shehbaz Sharif has expressed his satisfaction at the record high remittances and resolved that the government was committed to economic prosperity after bringing economic stability.
Meanwhile, Dubai Islamic Bank has successfully arranged a $1 billion syndicated term-finance facility for Pakistan, the Ministry of Finance said in a statement. The five-year financing arrangement has been facilitated through a consortium of international investors, reflecting growing confidence in the country’s economic reform programme.
Finance Minister Muhammad Aurangzeb called the deal a significant step in the country’s efforts to secure ethical and innovative funding solutions. He added that the success in securing Shariah-compliant financing highlights Pakistan’s commitment to broadening its financial base while aligning with Islamic finance principles.
