Why Pakistan, under the pressure of foreign exchange, is exploring USD1 cross-border payments

Against the backdrop of a long-term current account deficit and tight foreign exchange reserves, Pakistan's sensitivity to the cross-border payment system is much higher than that of most emerging market countries. The traditional USD clearing system centered around SWIFT is costly, inefficient, and poses a risk of being "financially choked" in extreme situations. Under these practical constraints, Pakistan's exploration of a USD1-pegged cross-border payment scheme is not an aggressive innovation but a highly pragmatic institutional patch.

The core value of USD1 does not lie in "de-dollarization"; on the contrary, it enhances the efficiency of USD in settlement. By stably anchoring the USD value, USD1 can avoid settlement risks caused by sharp fluctuations in the local currency and bypass multiple layers of intermediary banks at the technical level, thereby increasing cross-border settlement speed. For Pakistan, which heavily relies on imports of energy, food, and industrial goods, this means more controllable trade costs and stronger payment certainty.

From a macro perspective, this exploration also reflects a common demand among emerging economies: not challenging the dollar hegemony but reducing the "barrier to use" of the USD system. When foreign exchange reserves are insufficient and credit ratings are under pressure, any tool that can reduce clearing costs and minimize time loss will be incorporated into the policy toolkit. The emergence of USD1 precisely fills this gap.

It is worth noting that Pakistan has not fully switched its cross-border payment system all at once but is instead using "exploration" and "pilot" as keywords. This indicates that its policy logic is not about overthrow but about gradual substitution. In a stage of highly uncertain global financial order, this cautious approach is actually more in line with the risk preferences of emerging markets.