KARACHI: Pakistan’s finance ministry is planning to tokenize up to $2 billion of domestic government debt in an initial phase, a senior official said on Sunday, as Islamabad explores digital financial instruments to broaden investor participation and modernize public debt markets.

Tokenization involves converting traditional financial assets such as government bonds into digital tokens recorded on a blockchain, allowing them to be bought, sold and held electronically. Proponents say the approach can lower transaction costs, improve transparency and allow smaller retail investors to participate in markets typically dominated by banks and institutional players.

The proposal was disclosed at ITCN Asia, one of Pakistan’s largest annual technology exhibitions, which brings together policymakers, technology firms, investors and startups from around the world. The event is increasingly being used by the government to outline early-stage thinking on digital finance, artificial intelligence and emerging technologies, though many initiatives remain exploratory.

“Ministry of Finance, Government of Pakistan, has also planned to tokenize some portion of its domestic debt worth $2 billion in first phase, primarily tapping retail investors,” the finance ministry said in a statement, quoting adviser to the finance minister Khurram Schehzad as speaking at the ITCN Asia forum.

The adviser did not provide a timeline, regulatory structure or implementation details for the proposed debt tokenization, and it remains unclear how the initiative would be integrated into Pakistan’s existing public debt management framework or overseen by financial regulators.

Pakistan has in recent months stepped up discussions around digital assets and financial innovation, including the creation of regulatory frameworks to better understand cryptocurrencies, blockchain applications and tokenized financial products. Officials say the country remains at an early stage, studying international models such as those adopted in the United Arab Emirates.