SBP Amendment Bill: A Game-Changer in Pakistan’s Financial Landscape

The passage of the State Bank of Pakistan (SBP) Amendment Bill on January 28, 2022, was far from smooth. Approved by a razor-thin margin of just one vote (43 in favor, 42 against), the bill faced fierce opposition protests accusing it of enabling “financial imperialism.” Aimed at ending direct government borrowing from the SBP, the reform was widely hailed by financial analysts as a victory for central bank independence, fulfilling a key IMF condition. However, the SBP had a different strategy in mind, swiftly devising a new system that would more effectively channel funds into government securities.

The post-reform scenario resembled a calculated game of strategy. The SBP, acting as the house, first altered the rules of the game, then brought new players to the table, and finally displayed surprising leniency in enforcing those rules.

This story traces that transformation: first, how the SBP redefined money flow through innovative open market operations (OMOs); next, how they broadened participation beyond traditional banks; then, how players leveraged these changes to unprecedented levels while oversight was lax; and finally, how other regulators joined in, dealing from the same financial deck