By For the first time, Pakistan has deployed a blockchain system in their banking sector to attract worker remittances from Malaysia. This forms part of a strategic plan by the Financial Action Taskforce (FATF) to combat money laundering and terror financing.
Implementing a blockchain will not only ensure that transactions are instant and secure but will also capture every step taken by any senders and receivers of remittances. Ultimately this will effectively combat the illicit and popular Hawala and Hundi systems at an international level.
State Bank Of Pakistan (SBP) spokesman Abid Qamar had this to say:
“The deployment of the blockchain technology, however, does not mean Pakistan has allowed international financial transactions in bitcoin and cryptocurrencies, which remain banned in the country. The central bank has allowed the use of the technology which has thousands of uses.”
Furthermore, Telenor Microfinance Bank had this to say in a statement released yesterday:
“Telenor Microfinance Bank, in partnership with Valyou of Malaysia, has introduced Pakistan’s first blockchain-based cross-border remittance service, powered by the industry-leading blockchain technology developed by Alipay – the online payment platform operated by Ant Financial Services Group.”
China’s Alipay had previously acquired a 45% stake in Telenor for a whopping $184.5 million, and the microfinance bank received approval to implement blockchain tech from the central bank a couple of months ago.
The settlement bank in charge of the remittance process utilising blockchain tech is Standard Chartered Bank said an official. This plan was revealed at an event which was held in Islamabad and attended by the SBP’s governer – Tariq Bajwa. This, of course, marks a major milestone in Pakistan’s road to financial inclusion.
Bajwa stated that international remittances, which currently equates to a massive $20 billion per annum, are of utmost importance from a macroeconomic standpoint and their contribution to improving the lives of millions of families in the country.
He said:
“Home remittances contributed over 6% to GDP, equivalent to over 50% of our trade deficit, 85% of exports and over one-third of imports in FY18.”
Furthermore, the central bank governor stated that the government along with the SBP had undertaken a number of initiatives to promote transfers of home remittances through the use of formal financial channels and the new blockchain system would aid in these efforts. The transfer of cross-border remittances in real-time ultimately adds an unprecedented level of facilitation and convenience for both senders as well as beneficiaries.
First Quarter Remittances Rise By 13%
Bajwa stated:
“This puts Pakistan on the map of very few countries in the world that have launched international remittance service using the blockchain technology.”
Norman Said, SI Global Solutions CEO, who was involved with the Islamabad Safe City project dubbed the deployment of blockchain technology as a step in the right direction.
He stated:
“This is a much bigger step than just digitalising financial transactions…this is all about a dedicated computing power between encrypt (send) and decrypt (receive).”
This is only the beginning, as time goes on, people in Pakistan could receive remittances from other nations through the use of blockchain technology.
The statement also added that Pakistanis living abroad in nations such as Malaysia would be able to send money home instantly and securely by use of Telenor’s remittance service provider Valyou.
The addition of blockchain tech will notably boost the transaction speeds and efficiency of remittances from Malaysia to Pakistan. The technology also ensures that all transfers are safe, secure and transparent as all data is shared, stored and uploaded through the blockchain remittance platform and will be encrypted with the most advanced protocols in order to protect all user privacy.
This new service will ensure that 24/7, real-time money transfers between the two countries are possible at a notably competitive exchange rate, “with Alipay’s transaction fee waived during the one-year trial period,” according to the statement.
Ant Financial Chairman and CEO Eric Jing had this to say:
“The new remittance service is one of the examples of how emerging technologies can assist countries to meet their digital and financial inclusion goals. We’re thrilled to be part of Pakistan’s financial inclusion efforts, and we’re dedicated to exploring breakthroughs and applying them to benefit more people in more places.”
Could blockchain technologies improve the sending of remittances in other nations? Perhaps Zimbabwe and other sub-Saharan countries could benefit from a blockchain remittance system? Let us know your thoughts by commenting below.
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