An Analysis of the Cash Cycle in Pakistan

Cash processing plays a crucial role in Pakistan’s financial system, ensuring liquidity, security, and public confidence in an economy where physical currency remains widely used. Despite the growing adoption of digital financial services and a determined push by the government to reduce dependency on cash, it continues to dominate daily transactions, particularly in the informal sector (which generates over 40% of GDP).

Efficient management of currency, therefore, remains essential to maintaining financial stability.

The State Bank of Pakistan (SBP), through the SBP Banking Services Corporation (SBP-BSC), oversees the issuance, distribution, and quality assurance of banknotes and coins. As of FY24, currency in circulation stood at PKR 10.93 trillion (c. $40 billion), reflecting the country’s continued dependence on physical cash.

Currency in circulation - 2020-2025 (source: SBP).