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HomeLaw & PoliticsNo real economic benefits from cryptocurrency says Pakistan's central bank governor

No real economic benefits from cryptocurrency says Pakistan’s central bank governor

Reza Baqir, the governor of Pakistan's central bank, recently disclosed that his agency has assessed that the hazards presented by cryptocurrencies "much exceed the advantages."

According to Baqir, Pakistan, like other jurisdictions that have prohibited or restricted the use of cryptocurrencies, requires more time to “completely grasp these technologies, not just from the risk-response viewpoint.” At the 2022 MASIC Annual Investment Forum, Baqir supported the SBP’s conclusion, which he claimed was identical to those made by “major rising markets such as China, India, and Russia.” He also mentioned some of the hazards involved with cryptocurrencies, as well as how these risks make these currencies less suitable for emerging nations. He stated that

First, in their current form, private digital currencies are primarily speculative in nature and have failed to deliver any meaningful use case or actual economic advantages, particularly to developing nations like Pakistan.

The governor also warned of the potential danger to financial and monetary stability posed by the volatile nature of cryptocurrencies. In his speech, Baqir repeats the claim that cryptocurrencies are “prone to being used for illegal economic activities.” For countries like Pakistan, he said, “there is a risk that the grey economy will grow and that money will leave the country.”

Despite advocating against cryptocurrencies, Baqir said that the SBP is open to allowing them provided the central bank’s concerns are resolved. “If in the future, solutions emerge that address existing concerns while also giving individuals more control, authority, and options over their financial decisions,” the SBP governor stated,

Meanwhile, Baqir shared his opinions on central bank digital currency (CBDC), which the SBP has been “studying both from a technological and functional standpoint.” It shouldn’t be done just because you need an alternative to private digital currencies or because you’re afraid of them, says Baqir. According to Baqir, CBDC research should be evaluated in terms of how it might help a regulator’s goal.

 

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Vaishali Goel
Technology enthusiast, explorer and academic scholar. Currently exploring the crypto world. Join me in my journey to see how crypto, NFT and Metaverse will change the world.
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