Pakistan’s stablecoin experiment could weaken its currency further: Daily Mirror

Pakistan’s plan to embrace a dollar‑linked stablecoin through a partnership with US crypto firm World Liberty Financial could accelerate the country’s dollarisation and undermine its macroeconomic stability, a new report has said.

The report in the Daily Mirror said that a dollar-pegged stablecoin embeds a preference for the dollar as store of value and medium of exchange encouraging households to hold it as a state-tolerated alternative and move away from Pakistani rupee (PKR).

Currency substitution through stablecoins could intensify exchange‑rate pressures and activate a feedback loop that accelerates rupee weakness.

“For a country with a fragile currency, recurring balance-of-payments stress, and limited monetary policy space, the introduction of an officially endorsed dollar-linked stablecoin risks amplifying rather than reducing instability,” the report said.

Further, the report noted that stablecoins bypass banks, diverting household and business liquidity into digital wallets outside the regulated system. In Pakistan, where monetary policy transmission depends heavily on banks’ balance sheets, this could blunt the impact of interest‑rate changes and complicate liquidity management, it said.