Key Points:

• Digital currency is defined as any currency that exists only in electronic form and never takes physical form at any point in time.
• In the context of Pakistan, a risk-based approach is suitable, which involves conducting a thorough assessment of risks associated with adopting a digital currency.
• Keeping in view the weak fiscal position of Pakistan, hyperinflation, and debt financing, SBP could establish a hybrid and decentralised framework in collaboration with private entities or banks for CBDCs.