The State Bank of Pakistan (SBP) has officially entered the trial phase of its Central Bank Digital Currency (CBDC) project, marking a significant step toward modernizing the country’s financial infrastructure. This initiative is designed to provide secure, instant, and cost-effective digital transactions, particularly benefiting individuals without access to traditional bank accounts. By fostering financial inclusion, the digital currency aims to improve accessibility to financial services across Pakistan.
The SBP is collaborating with the Japanese blockchain firm Soramitsu to develop the digital rupee using the Hyperledger Iroha platform. This platform will enable offline smartphone payments, a crucial feature for regions with limited connectivity, such as rural areas. The pilot program is set to begin before the end of 2025, with the goal of completing it within the current fiscal year ending in June 2026. Alongside this, the SBP is finalizing a regulatory framework under the newly established Pakistan Virtual Assets Regulatory Authority (PVARA), which will oversee the digital currency ecosystem.
Strategic Collaboration with Soramitsu
In August 2025, the SBP entered into a partnership with Soramitsu, a Tokyo-based blockchain developer, to design and implement the CBDC pilot. Soramitsu’s Hyperledger Iroha platform will facilitate secure digital transactions while supporting offline smartphone payments, which is essential for regions with limited connectivity. This collaboration is a major step toward addressing the technological challenges that may arise during the digital currency’s implementation.
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Regulatory Framework and Oversight
The creation of the Pakistan Virtual Assets Regulatory Authority (PVARA) under the Virtual Assets Ordinance, 2025, lays the legal foundation for regulating virtual asset services and service providers across Pakistan. PVARA’s key responsibilities include licensing entities, ensuring compliance with financial and legal standards, and aligning with international regulations to curb illicit activities. This regulatory body will play a crucial role in maintaining the integrity and stability of Pakistan’s digital currency ecosystem.
Technological Infrastructure and Pilot Details
The CBDC pilot will integrate with the Raast instant payment system, enabling real-time settlement of small-value retail transactions. The system will allow users to register using their national identity cards, make transactions via QR codes, and access essential government services such as tax payments. The pilot is expected to begin in late 2025, with a targeted completion date by June 2026.
Broader Implications and Future Prospects
The digital rupee pilot is part of Pakistan’s broader strategy to modernize its financial system and integrate digital financial services. If successful, this initiative could serve as a model for other countries in the region looking to implement central bank digital currencies. The collaboration between the SBP and Soramitsu highlights the growing trend of international cooperation in the realm of financial innovation, with Pakistan looking to strengthen its digital economy by leveraging Japan’s technological expertise.
