Coin Distribution in Pakistan

Aftab Anwar Baloch

Pakistan ranked as the world’s fifth most populous country with a population of over   244.25 million as of 2024, is notable for having the largest Muslim population globally. The history of Pakistan, as reflected through its coinage, offers a fascinating narrative of the country’s development and its shifting political and cultural landscape.

The history of coins in Pakistan is a testament to the region’s rich and multidimensional heritage, encompassing a broad spectrum of cultural, political, and economic developments. This history is deeply intertwined with the broader narrative of the Indian subcontinent, showcasing how coinage evolved over millennia in response to changing empires, trade practices, and cultural influences. This brief history of Pakistan’s coinage is divided into three parts:

• First is the Pre-Islamic period
• Second stretches from the introduction of the Islamic period through to British Indian rule
• Third covers the Contemporary Era

It reflects the region’s dynamic history, showcasing a wide array of influences from ancient civilizations to colonial powers and modern statehood. Each coin minted in Pakistan not only served a functional role in trade and economy but also stood as a symbol of the cultural and political narratives that shaped the nation.

Amidst the broader global shift towards digital transactions, the coins still hold a unique place in the currency system. They are especially valuable for smaller transactions, where their physical presence is practical and meaningful. For instance, in everyday scenarios such as purchasing tickets for the orange train, stocking up at utility stores, or navigating the metro system, these coins provide a convenient and functional means of exchange.

In Pakistan, the distribution of coins adheres to a well-structured model involving several key stakeholders. The State Bank of Pakistan (SBP) serves as the central bank of the country, and holds the responsibility for the overall demand and distribution of coins. The production of these coins is managed by the Pakistan Mint, located in Lahore. Since its establishment in September 1943, the facility was originally known as “His Majesty’s Mint” during the British colonial period. Following the partition of British India and the creation of Pakistan in 1947, the mint was renamed Pakistan Mint.

Since then, it has been tasked with manufacturing coins based on the demands placed by the State Bank of Pakistan, ensuring a steady and regulated supply of currency for circulation throughout the country. This process highlights a seamless integration between the central banking authority and the minting operations, ensuring that the coinage system functions efficiently to meet the needs of Pakistan’s economy.

The primary responsibility of the State Bank of Pakistan is to adjust the levels of coin production and distribution in response to varying demand, a task that involves a complex approach. To forecast demand accurately, the SBP relies on a combination of key factors and data sources. This includes the analysis of historical coin usage patterns, which provides insights into how different denominations of coins are utilized over time. By examining past trends, the SBP can identify seasonal fluctuations, economic cycles, and other patterns that influence coin demand.

Economic indicators also play a significant role in shaping demand forecasts. For instance, changes in economic activity, inflation rates, and overall economic growth can affect consumer spending and, consequently, the demand for cash transactions. Additionally, demographic factors, such as population growth and urbanization, impact how coins are used and circulated. A growing population or an increase in commercial activities in specific areas may lead to a higher demand for coins. By employing these strategies, the State Bank of Pakistan aims to maintain an optimal supply of coins in circulation.

Pakistan Mint is involved in the production of Proof Coins, Commemorative Coins and following Indigenous Coins against indent of the State Bank of Pakistan with the following details:

Pakistan has issued numerous commemorative coins over the years, each celebrating important events, and milestones, or paying tribute to well-known personalities and celebrities. Each of these commemorative coins reflects Pakistan’s dedication to preserving and celebrating its history and heritage. They are usually issued in limited quantities and can be made of various metals such as silver and copper. The coins often come with detailed packaging and certificates of authenticity, making them valuable to collectors and historians alike.

In recent years, the Pakistan Mint has experienced a significant shift in its production activities, largely driven by changes in the demand for coins. Over the past two years, the mint has halted its coin production operations due to a notable decline in demand.

Coins have traditionally been a cornerstone of cash transactions, serving as a tangible and accessible medium for everyday purchases. However, the landscape of financial transactions has undergone a dramatic transformation with the rise of digital payment systems, such as credit cards, mobile wallets, and online banking. These technologies offer significant advantages in terms of speed and convenience, allowing users to complete transactions with a simple swipe, tap, or click, thus streamlining the payment process.

A notable advancement in this domain is the widespread adoption of contactless payment methods, facilitated by Near Field Communication (NFC) technology. This innovation has gained considerable traction due to its efficiency, the increased emphasis on hygiene, and the reduction in theft risk, making it an attractive option for both consumers and merchants. Younger generations, who are increasingly familiar with digital technologies and tend to prefer electronic payment methods, are contributing to this shift away from traditional currency. Their comfort with digital tools and their propensity for using online and mobile payment solutions reflect a broader trend towards a cashless society. As these digital technologies continue to evolve and gain traction, they promise to further revolutionize payment systems, potentially reducing the reliance on physical coins even more.

Despite the growing prominence of digital payment methods, coins remain an important tool of currency and retain substantial cultural and historical significance, which ensures their continued relevance in various contexts. Many nations, including Pakistan, use coins to commemorate significant events, historical figures, and national symbols, embedding cultural heritage into everyday life. These commemorative and collectible coins often carry special designs and inscriptions that celebrate important milestones or honor historical events, making them valuable not only as currency but also as artifacts of national pride.

To bolster the use of coins in an increasingly digital financial landscape, relevant authorities must chalk out and implement strategic initiatives that address both practical and perceptual barriers to coin usage. One effective strategy could involve enhancing the convenience and accessibility of coin transactions by promoting their acceptance in a broader range of businesses and public services. The State Bank of Pakistan in coordination with the competent bodies needs to take the following steps which can be helpful to encourage the usage of coins.

• The Mint’s machinery is outdated; and needs replacement;
• The government should promote the usage of coins for bus tickets, cabs, three-wheelers, and amusement parks;
• Issuing commemorative coins can also encourage the collection and circulation of coins among enthusiasts and collectors;
• Silver and nickel confiscated by customs and anti-smuggling agencies should be minted into coins usage in the country;
• The government may consider introducing a Rs 10 coin to replace the paper note and encourage its use;
• The government should engage well-reputed international companies to modernize Pakistan Mint Lahore, making it a revenue-generating entity as it has remained lying idle with no orders for the past two years; and
• The current government should focus on revitalizing this significant entity to transform it into a profit-earning organization.

By adopting a multifaceted approach that combines practical improvements and with educational efforts, authorities can effectively encourage the use of coins and ensure their continued relevance in a rapidly evolving monetary environment. This would benefit both the government and Pakistan Mint employees, who are presently demoralised but being without any work and non-production of coins and is a big dilemma that needs to be resolved amicably in the national interest.

The writer is Customs, Tariff and Trade Expert.