The Policy Research Institute of Market Economy in Pakistan has outlined a number of economic issues that could be alleviated by greater adoptions of bitcoin and other virtual currencies within Pakistan. The institute cites a large underbanked population, underdeveloped financial apparatus, and rampant inflation as major economic and social problems that could be addressed by bitcoin and other virtual currencies.
The Institute Argues That the Pakistani Government Adopt a “Rule-Based” Monetary System Similar to Bitcoin
Pakistani independent economic policy think-tank, The Policy Research Institute of Market Economy (PRIME), has articulated a number of prescient use-cases for bitcoin in Pakistan. In an article entitled Money Systems: Why Rupee Should Mimic Bitcoin, the researchers allude to a number of economic and social problems within Pakistan that cryptocurrency could help alleviate.
The article first discusses Pakistani inflation, drawing attention to recent governments recklessly printing rupees. The article asserts that since 2010, the Pakistani government has increased monetary resources at an average annual rate of 16.4% despite the average annual growth of real GDP having been just 3.8%, which “bears [an] adverse effect on the value of rupee as evident from the recurring bouts of inflation.” As such, the pre-defined scarcity of bitcoin’s token distribution is extremely appealing to PRIME, who advocate that Pakistani adopt a similar “rule-based” monetary system that guides the release of new money into circulation.
PRIME identify poor access to banking services as a significant barrier to widespread Pakistani economic development, citing The World Bank’s Global Findex Report of 2014 to argue that only 13% of adult Pakistani citizens own a bank account. PRIME make comparisons to the historically unheralded access to basic financial services that cryptocurrencies and mobile-based payment apps have yielded in Africa, arguing that a similar financial architecture should be developed in order to promote growth across the Pakistani economy.
Bitcoin Is Gaining Momentum in Pakistan
With India taking recent steps toward cryptocurrency liberalization and a further digitization of the Indian economy, it is likely that we will see an increase in the volume of bitcoin and cryptocurrency-related rhetoric and policy coming from Pakistan.
PRIME’s article comes a month after announcements that the Pakistan Federal Board of Revenue (FBR) would begin investigating the potential use of bitcoin for money laundering or tax evasion purposes. The FBR’s announcement has done little to dampen bitcoin traction in Pakistan, as localbitcoins saw its highest ever week for Pakistani bitcoin trading volume the week following media coverage of the FBR’s investigations.