Aftab Anwar Baloch
The integrity of a nation’s currency is central to economic stability, public confidence, and the effective transmission of monetary policy. In Pakistan, responsibility for printing and securing banknotes rests with the Pakistan Security Printing Corporation (PSPC), an institution that has undergone significant structural and operational evolution since its establishment. As Pakistan prepares to introduce a new family of currency notes, growing concerns over durability, counterfeiting risks, and technological obsolescence have made it imperative to modernise both the physical characteristics of banknotes and the systems that support their lifecycle management.
PSPC was established in 1949 to meet Pakistan’s post-independence requirement for the secure printing of currency notes and other sensitive instruments. It operates as a company registered under Pakistan’s corporate legal framework and functions as a wholly owned subsidiary of the State Bank of Pakistan (SBP). While PSPC historically operated under the administrative control of the Finance Division, a pivotal institutional shift occurred in 2017 when ownership and oversight were transferred to SBP. This transition placed currency production directly under the central bank’s authority, strengthening alignment between banknote issuance, monetary policy objectives, and international security standards.
At present, Pakistan’s currency in circulation consists primarily of paper banknotes across multiple denominations, including Rs. 10, Rs. 20, Rs. 50, Rd 500, Rs. 1,000, and Rs. 5,000, alongside coins for Rs 1 and Rs 2. Although these notes have supported economic activity for decades, they increasingly face structural challenges. Paper notes suffer from rapid wear and tear, especially in lower denominations with high circulation velocity, leading to frequent replacement and rising operational costs. Simultaneously, advancements in printing and reproduction technologies have increased the sophistication of counterfeit attempts, placing additional pressure on existing security frameworks.
Recognising these challenges, the State Bank of Pakistan, with the approval of the Federal Government, has initiated the process of introducing a new series of banknotes, with phased circulation expected to commence during 2026 onwards. The redesign is not purely aesthetic; it represents a strategic intervention aimed at enhancing durability, strengthening anti-counterfeiting defenses, and aligning Pakistan’s currency system with international best practices adopted by central banks worldwide.
The approval process for new banknote designs and features follows a multi-tier governance framework. Strategic approval is vested in the State Bank of Pakistan as the issuing authority, while final authorization is granted by the Federal Government in accordance with Pakistan’s monetary and legal framework. Technical evaluation, feasibility assessments, and security validation are jointly undertaken by SBP and PSPC to ensure that design ambitions are supported by production capability and risk controls.
The responsibility for designing and technically developing the new banknotes lies with PSPC under SBP’s oversight. PSPC translates policy directives into secure, printable designs incorporating modern anti-counterfeiting elements such as advanced watermarks, security threads, optically variable inks, see-through windows, and machine-readable features where specialized expertise is required, PSPC will engage international design consultants and technology vendors, a standard practice among central banks during major currency upgrades.
A central element of the new banknote series is the proposed introduction of polymer substrate, beginning with selected lower denominations rather than an immediate full conversion. The justification for this phased approach is both economic and operational. International experience demonstrates that polymer banknotes last approximately 2.5 to 4 times longer than traditional paper notes, particularly in high-circulation, low-value denominations. As a result, lifecycle costs are significantly reduced despite higher upfront unit prices.
In Pakistan’s context, denominations such as Rs. 10 are prime candidates for polymer conversion due to their heavy usage and rapid deterioration. A selective transition allows authorities to capture durability benefits while managing production complexity, investment requirements, and supply-chain dependencies.
Polymer substrate is not manufactured domestically and will be imported by outsourcing from established international suppliers specializing in banknote-grade materials. Supplier selection typically follows a competitive and security-vetted procurement process under central bank oversight.
The partial shift to polymer will have implications for paper-based production volumes. However, as the transition is selective rather than comprehensive, the impact on paper procurement and associated supply arrangements is expected to be gradual and manageable. At the production level, PSPC will require targeted investment in equipment upgrades, staff training, and quality assurance systems to support higher-specification printing. While polymer notes are more expensive to produce initially, international central bank studies estimate overall lifecycle savings of 20–30 percent due to reduced replacement frequency (Bank of England; Reserve Bank of Australia).
The changeover to polymer and redesigned notes will be handled through phased circulation to ensure economic continuity. Existing paper notes will remain legal tender during the transition period, preventing disruption to cash-based transactions. Public awareness campaigns led by SBP will be essential to familiarise citizens with new designs, security features, and handling characteristics. In parallel, banks, cash handlers, and machine operators will be required to recalibrate equipment and update operational protocols.
The integration of redesigned banknotes, polymer substrate, and internal traceability systems reflects a broader policy shift toward international best practices in currency management. Advanced economies increasingly combine physical security features with digital monitoring, analytics, and lifecycle oversight. For Pakistan, this integrated approach strengthens coordination between SBP, PSPC, commercial banks, and law-enforcement agencies, enabling faster detection of counterfeit trends and more targeted regulatory responses.
Pakistan stands at a critical juncture in the evolution of its currency system. The transfer of PSPC under the State Bank of Pakistan, the planned introduction of a new family of banknotes, the selective adoption of polymer substrate, and the deployment of traceability systems collectively represent a comprehensive strategy to modernise currency security. Success will depend on disciplined governance, phased implementation, public communication, and sustained investment in technology and institutional capacity. If executed effectively, these reforms can enhance public trust, reduce counterfeiting risks, and align Pakistan’s monetary infrastructure with globally accepted standards.
