Technocratic Dreams, Political Realities: Evaluating Full Reserve Banking for Pakistan

This paper offers a critical assessment of a recent proposal advocating full reserve banking in Pakistan, inspired by a revival of the Chicago Plan. While rooted in ethical concerns and macroeconomic instability, the paper argues the proposal is best understood as a power-sharing compromise-one requiring a rare balance of power unlikely in Pakistan's current institutional context. Drawing on historical reform efforts and global experiences-including Japan's window guidance and China's state-led finance-the paper outlines why such proposals often fail to materialize. It then proposes a set of pragmatic, culturally resonant reforms grounded in Islamic finance, institutional redesign, and moral legitimacy. Ultimately, it reframes monetary reform not as a technical fix, but as a political struggle over sovereignty, legitimacy, and the public purpose of money-a battle that can be meaningfully fought using tools already at hand.