From Cash to Code: The Transition to Central Bank Digital Currencies in Pakistan

Abstract

The introduction of Central Bank Digital Currencies (CBDCs) in Pakistan presents a transformative opportunity to enhance the nation's financial landscape by providing a more efficient, inclusive, and secure medium for financial transactions. CBDCs can facilitate cross-border payments, enhance financial inclusion and control for financial crime. However, the success of implementing digital currencies depends very much on society's acceptance of this idea. This study uses a quantitative descriptive design to explore public opinion, awareness and readiness to adopt the Central Bank Digital Currencies in Pakistan. A survey was conducted with respondents from diverse demographic backgrounds to assess their understanding of CBDCs, concern regarding privacy and financial security, and overall willingness to adopt digital currencies issued by the central bank. In this study, the factors that may influence or predict the success of Central Bank Digital Currency in Pakistan's economy are independent variables. The success of CBDC in usage and integration in Pakistan's economy is the dependent variable. Gender and profession are control variables. The analysis that was conducted highlights a generally positive outlook towards CBDC among the survey participants, tempered by notable concerns about trust and sustainability. However, the findings suggest that while there is cautious interest in CBDCs among common Pakistanis, substantial efforts are needed to address the knowledge gap and mitigate concerns about security and privacy. Digital education of the population is one of the key factors in successfully implementing digital currencies in any country, particularly Pakistan. In addition, trust issues remain a critical barrier, especially among those aware of CBDC's benefits. Thus, the results of this study will be useful for policymakers and financial institutions in the context of planning activities for implementing CBDC in Pakistan.

Keywords

• digital currencies
• central bank
• pakistan
• monetary policy
• digital economies