Pakistani parliament plans to abolish banknotes, domestic Bitcoin trading volume increases by 400%

This week, Pakistan’s parliament proposed abolishing the highest-denomination banknotes, and domestic bitcoin trading volume rose近400% .

Despite opposition from the government, the Pakistani parliament has decided to implement the resolution: to abolish the 5,000 rupee note in order to "crack down on illegal funds".

The war on cash

Pakistan plans to crack down on illegal activities involving cash, a policy likely inspired by India's demonetization move last month, according to multiple news outlets.

Reuters reported that Pakistan's parliament believes that fewer high-value banknotes in circulation "will encourage people to use bank accounts, thereby reducing the size of the illegal economy."

Ironically, India had earlier hinted during its demonetization campaign that cracking down on counterfeit currency production in Palestine was one of its goals.

Pakistan's currency reform is different from its neighbours, where demonetisation will take years rather than just a few days, according to parliament.

Pakistan’s fintech industry is on high alert

In any case, the news of demonetization in Pakistan has suddenly exploded this emerging Bitcoin trading market. Unlike India, Pakistan's Bitcoin economy is still relatively backward and the relevant infrastructure is relatively lacking.

Local bitcoin exchange Urdubit recently participated in a seminar aimed at bringing a larger user base to startups through digital economy technologies.

According to a media report:

Although the electronic trading sector has great potential, most SMEs in Pakistan do not have this capability.

Conference organizer Ali Sarfraz Hussain added:

Although Pakistan started late, with the rapid development of electronic transactions, the number of domestic participants in related industries is gradually increasing.

Pakistan is the latest entrant into the war on cash. In addition to India, Venezuela and Australia have also initiated currency reforms.