Aurangzeb says reviewing tokenization of Eurobond debt

Pakistan's Finance Minister Muhammad Aurangzeb is advocating for financial innovation, specifically the tokenization of Eurobond debt, to lower the cost of doing business and integrate more people into the formal economy as the country shifts from economic stabilization to sustainable growth. During a virtual dialogue organized by the Pakistan Banks’ Association and Lahore University of Management Sciences, Aurangzeb emphasized that digital assets should be integrated into the financial system based on practical economic benefits and their ability to streamline business operations.

He highlighted the use of deposit tokens on blockchain networks as a practical example of digital financial innovation, adding that discussions are underway with the government to explore the tokenization of existing Eurobond debt and seek Cabinet approval before proceeding with a request for proposals. Aurangzeb also referred to the Bank for International Settlements’ Project Agora, which examines tokenized bank deposits and central bank reserves to explore cross-border payments.

He stressed that banks play a crucial role in protecting customers' funds and mitigating risks associated with digital technologies, while acknowledging that risks linked to stablecoins depend on their issuers and redemption mechanisms. Pakistan has made progress in developing a legal and supervisory regime for virtual assets, with the Virtual Assets Act 2026 providing the legal framework, and Aurangzeb underscored the need for effective regulations that distinguish between different categories of digital assets.

Banks are urged to actively participate in developing practical proposals around digital financial technologies, leveraging their customer relationships, operational experience, and risk management capabilities.