The State Bank of Pakistan (SBP) is taking significant steps to establish a cross-border payment system that will provide convenient and cost-free services to Pakistanis residing abroad. The primary objective of this initiative is to encourage individuals to send money back home through formal banking channels, thereby promoting financial inclusion and bolstering the country’s economy.
To realize this vision, the SBP has initiated discussions with the Arab Monetary Fund (AMF), a prominent financial institution within the Arab League. The aim is to connect Pakistan’s innovative payment system, known as RAAST, with the Buna banking systems owned and operated by the AMF. This collaboration intends to streamline cross-border payments for Pakistanis living abroad, enabling real-time transactions.
Jameel Ahmed, the Governor of the State Bank of Pakistan, shared insights into the ongoing negotiations during the launch of a new Pakistani banknote in Karachi, commemorating the SBP’s 75th anniversary. Ahmed stated, “We are in talks with the Arab Monetary Fund, which has a remittance project called Buna that connects all Gulf Cooperation Council (GCC) countries. It’s also likely that SBP will sign an agreement with them soon. So, Pakistan’s payment system will be linked with Buna.” He further emphasized that this integration would significantly enhance the speed and cost-effectiveness of remittances.
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The seamless integration between RAAST and Buna is a crucial objective outlined in the SBP’s “Strategic Vision 2028,” a comprehensive plan aimed at propelling the Pakistani central bank forward. RAAST, Pakistan’s pioneering instant payment system, facilitates secure digital payments between individuals, companies, and government agencies. As of March 2023, approximately 30 million people have registered for the RAAST Payment system, highlighting its widespread adoption.
Buna, managed by the Arab Regional Payments, Clearing and Settlement Organization, enjoys the support of various Arab central banks. This platform empowers financial institutions and central banks in the Gulf and beyond to conduct cross-border transactions in real-time using Arab and international currencies. Buna provides global financial institutions with a single entry point to the region’s financial systems, while also enabling local institutions to engage in diverse financial transactions involving multiple currencies.
The introduction of this efficient and cost-effective payment system is expected to incentivize individuals to utilize formal banking channels for remittances. Consequently, funds flowing into the country, predominantly from GCC states, will be channeled through the banking system, contributing to the overall economic growth and stability.
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By establishing a connection between RAAST and Buna, the State Bank of Pakistan aims to revolutionize cross-border payments, ensuring the convenience, affordability, and security of transactions for overseas Pakistanis. This initiative aligns with the SBP’s commitment to enhancing financial inclusivity, promoting economic development, and fostering stronger ties with the Arab League and the global financial community.
