Fiscal dependence on SBP generates inflationary pressures and deters growth of the long-term government securities market priced in line with the prevailing yield curve. III. Transformation of the banking system  Process of modernization of the banking system is well underway as there is no scope for complacency in Pakistan after the tremors and economic losses caused by the Asian financial crises in 1997/98.
It has to be recognized that Pakistan’s banking system has witnessed a sea change: (i)  In terms of size, structure and ownership, the banking assets doubled over CY00-05 reaching Rs 3,649 billion (over $ billon) by end-CY05.