KARACHI: A senior official of Pakistan’s central bank said the bank was working to diversify trade settlement options and allow businesses to conduct transactions in local currencies, citing an existing agreement with China to facilitate such arrangements, according to a transcript of his statement released on Thursday.
Speaking at a press briefing of the Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development (G24) in Washington, Muhammad Ali Malik, Executive Director at the State Bank of Pakistan, said the move was part of efforts to create flexibility in international trade.
The G24 brings together finance ministers and central bank officials from developing economies to discuss global monetary, financial and development issues.
Malik was responding to a question on Pakistan’s stance regarding the use of national currencies in bilateral trade and the potential advantages or drawbacks of such arrangements.
“From Pakistan’s perspective, we have been working quite hard to diversify and settle some trade in local currencies,” he said. “We have signed a currency swap agreement with the People’s Republic of China, with the central bank of China. And one of the objectives is to assist in the transition to local currency.”
He added that while the central bank supported trade in local currencies, the decision ultimately rested with businesses.
“It is really up to the choice of traders, importers and exporters in which currencies they want to denominate,” Malik continued.
He pointed out that the State Bank “as a central bank, wants to provide an enabling environment to businesses so that they can make a choice, a commercial choice if they want to determine or denominate their trade in local currency.”
“We are supportive of that, and we are working hand in hand with the industry there,” he added.
The exchange came amid growing interest among developing countries to reduce dependence on the US dollar in international trade, a trend gaining momentum as nations seek greater currency stability and resilience in an uncertain global economy.
Pakistan’s delegation, led by Finance Minister Muhammad Aurangzeb, is currently in Washington D.C. to attend the World Bank and International Monetary Fund annual meetings, where debt sustainability, fiscal reforms and regional trade have been key agenda items.
