Pakistan moves to legalise digital currencies with proposed SBP act amendments

Morning! Imagine you’re trying to sell something really special to you. After thinking about it for weeks, you decide it’s worth Rs. 1,000. You throw a big auction, invite all people with money, but only one person shows up. They look at your treasure and say, “Ehh, I’ll give you Rs. 200 for this”. Ouch.

That’s kind of what happened with the final bidding for the privatization of Pakistan International Airlines (PIA). The government was hoping for a solid offer (only like 85 billion rupees) but ended up with just one bid of 10 billion Pakistani rupees for a 60% stake in the national carrier - which is only about 23.53% of what the government was aiming for.

Let’s just say, this deal didn’t quite take off..

In this week’s edition:

😵 CEOs and stock prices

💰 Pakistan: I have no interest in interest

🔎 Best search engine battle is on

₿ Are you ready for Pakistani-crypto-bros?

- The Itla Squad 💼

Business

Global 🌎️

Is feeling bad for the CEOs allowed?

All those scenes in movies of those powerful men in suits in high glass buildings panicking over stock prices might not be so exaggerated after all.

According to the Conference Board's "CEO Succession Practices in the Russell 3000 and S&P 500: 2024 Edition" report, U.S. companies are getting quicker at replacing CEOs when their stock performance is poor. But while they’re moving faster to change leadership, they’re still using the same traditional methods to find a replacement. Almost made you empathise with the CEOs, didn’t we?

The details:

• Over the past seven years, a company’s stock performance has become a much bigger factor in deciding if a CEO stays. In 2024, 42% of S&P 500 companies and 45% of Russell 3000 companies that changed CEOs had stock returns in the bottom 25% of their industry (means if it’s among the lowest 25% in their field, there’s a higher chance the CEO will be replaced). This has increased from 2017, when only about 30% of companies in these indexes replaced CEOs due to low stock performance.

• Investor demands are also making boards act faster. Shareholders, including activist investors, are pushing companies to replace CEOs if stock prices drop, so boards often try to get ahead by making changes themselves.

• Despite the urgency to replace underperforming CEOs, boards are sticking to traditional hiring practices. Most new CEOs are promoted from within the company, with 77% in the S&P 500 and 59% in the Russell 3000 being insiders. Many of these leaders previously held roles like COO, president, or CFO.

• The number of women leading companies has hit a record high. Female CEOs now make up 9.5% of the S&P 500 and 7.6% of the Russell 3000, though most of these women are leading smaller companies in sectors like healthcare, consumer goods, and materials.

Way forward: Currently, many companies tend to choose CEOs who are long-term insiders, often white men in their early 50s who have served as chief operating officers (COOs) or other high-ranking executives and it seems like they want to stick with doing so as well.

TLDR: According to a report, U.S. companies are now faster at replacing CEOs when their stock prices drop. However, they still mostly stick to old ways of hiring, mainly promoting people already inside the company, usually white men in their early 50s.

What else is new in news

✶Time for feeling sorry for the rich is over as U.K. Finance Minister Rachel Reeves said the tax on carried interest would go up to 32% instead of the 45% originally promised. This is a win for British private equity companies, who lobbied hard to avoid a bigger tax hike.

Local 🇵🇰

Not a lot of interest in interest

“Is this the Islamic Republic of Pakistan?” It might just be.

Walee Financial Services has launched Pakistan's first interest-free small loan option called Hakeem and is part of Pakistan’s effort to create a more Shariah-compliant financial system. This new loan type lets people borrow small amounts without interest by using a simple trade system.

The details:

• The loan works by having people and small businesses join a trade process to access funds without paying interest, making it in line with Islamic rules.

• Walee’s interest-free loan supports Pakistan’s plan to remove interest from the economy by 2028, which was recently added to Pakistan’s constitution.

• Walee partnered with Islamic scholars to design this new loan, ensuring it meets Islamic guidelines and is suitable for everyday use.

Way forward: Walee’s interest-free loan Hakeem sets a new path for fair and Shariah-compliant finance in Pakistan. Moving forward, the focus will be on expanding this interest-free option, reaching more people and businesses.

TLDR: Walee Financial Services has launched Hakeem, Pakistan's first interest-free small loan option, aimed at creating a Shariah-compliant financial system. This loan allows individuals to borrow small amounts without paying interest by participating in a trade process.

News Flash

✶ It seems our happiness about low inflation rate last month was short-lived.

In October, Pakistan's inflation rate rose to 7.2%, up from 6.9% in September, according to the Pakistan Bureau of Statistics. This comes after inflation peaked at 38% last year and was at 26.8% in October 2023.

Tech

Global 🌎️

Winter is coming…for Google

The day Google was dreading is actually here and no, it didn’t try incorporating AI into its engine again.

OpenAI has changed ChatGPT into a search engine that can find and summarize information from the internet, similar to how Google works.

The details:

• Instead of showing a list of links, ChatGPT gives direct answers in a chat-like format, making it easier for users to get the information they need.

• The search engine provides current results, so users can find the latest information available.

• Users can talk to the AI in everyday language, asking complex questions and receiving clear answers.

• The AI can check information against other sources, helping to lower the chances of providing incorrect answers that sometimes occur with traditional search engines.

Way forward: OpenAI plans to connect the search engine with other tools, like Codex for coding help and DALL-E for image creation. There are questions about user privacy since the search engine will store data to make searches more personalized.

TLDR: OpenAI has launched ChatGPT as a new search engine that summarizes information from the internet in a conversational format, moving away from traditional link-based results. It provides current information, allows users to ask complex questions in everyday language, and cross-checks facts to improve accuracy.

What else is new in news

✶ Apple is putting its money where its tech is, committing about $1.5 billion to Globalstar, a satellite communications company, to boost iPhone services.

This investment is part of a broader effort to connect smartphones directly to satellites - aka direct-to-device (D2D) satellite market- a market that also includes companies like SpaceX.

Local 🇵🇰 

Are you ready for Pakistani-crypto-bros?

The federal government wants to change the State Bank of Pakistan (SBP) Act that would let dual nationals serve as governor and deputy governors of the central bank and make digital currencies, like Bitcoin, legal in Pakistan. If approved, this would be a big change in the government’s financial policies.

The details:

• Dual nationals could hold positions as governor, deputy governors, and non-executive directors on the SBP board. This lifts a rule from January 2022 that prevented them from serving.

• Digital currencies like Bitcoin could become legal to use in Pakistan. The SBP would be allowed to issue and manage these digital currencies, meaning they can handle both digital and physical money. They also plan to create a branch to develop digital payment systems. There would be fines for anyone who issues digital currency illegally, costing double the value of the unauthorized currency.

• The SBP board would get more power to approve important financial reports, including annual and half-yearly reports.

Way forward: These proposed changes could greatly impact how the SBP operates and how money is managed in Pakistan and also how our drawing room conversations will look like in future.

TLDR: The government is proposing changes to the State Bank of Pakistan Act that would allow dual nationals to hold top roles at the central bank and legalize digital currencies like Bitcoin. If passed, the SBP would have the authority to issue and manage digital currency.

Tech tour of news

✶The Pakistan Telecommunication Authority (PTA) has announced that internet services in the country are fully back to normal after months of slow speeds. A PTA spokesperson explained that problems with the South East Asia-Middle East-Western Europe 4 (SMW4) and Asia-Africa-Europe 1 (AAE-1) submarine cables have been fixed, which ended the slowdown.

More interesting Itla (اطلاع) we consumed:

😬 If you’ve ever wondered if your job might be a bullshit job like it is work that could vanish tomorrow without anyone batting an eye – not a soul would notice, and humanity would be fine? Then, “Are We Finally Reaching Peak Awareness of Corporate Nonsense?” is a must-read.

It dives deep into the absurdity of the white-collar job market and how so many of us are stuck in jobs that, honestly, don’t need to exist. The best line? “If you work a job that’s partially or wholly bullshit, you know it. Very rarely is the person in such a position under any grand delusion that their job is something worth doing, and that knowledge is a sort of spiritual violence in itself.”

To anyone from our office reading this: We just found it an interesting read, that’s all..