The Nepal Rastra Bank (NRB) is prepared with revisions to the law determining its powers and responsibilities, allowing the monetary authority to issue a digital version of Nepal’s fiat currency, the Nepalese rupee. The news came after a study concluded that a central bank digital currency (CBDC) would be a feasible project.
Established
in 1956, The Nepal Rastra Bank (NRB) is responsible for managing
the key financial projects of the country. According to Revati Nepal, chief of
the bank’s Currency Management Department, a task force has drafted an
amendment bill. He said, “After internal discussions, we will send the bill to
the government to table it in parliament.” Changes will soon be made to the
Nepal Rastra Bank Act from 2002.
The study
was announced with the NRB’s Monetary Policy 2021-22 paper. A team of experts
that Revati Nepal headed suggested that before developing the CBDC, the
regulator must introduce the legal provisions that would allow it to implement the
same.
The experts
have suggested steps that would help the NRB to move ahead. An NRB official
said, “There are suggestions for technical and economic issues to be
considered.”
The central
bank hopes to design a separate digital wallet for the CBDC, which can be used
to conduct digital banking transactions. “Measures will also be taken to
explore interoperability with the digital payment service providers,” Nepal
elaborated.
No Rush
The
executive has also clarified that the Nepal Rastra Bank is not in a hurry to
issue digital currency. It wants first to observe how neighboring countries like
India and China proceed with introducing their CBDCs. Nepal emphasized: “We
don’t want to take the unnecessary risk by rushing into introducing digital
currency.”
In
February, India’s finance minister announced that they plan to launch a digital
version of their currency during the next financial year. India’s Reserve Bank
of India (RBI) is expected to roll it out in 2023.
Also, China
has been exploring the potential of a CBDC since 2014. The country is
conducting trials in cities like Shenzhen, Suzhou and Chengdu and digital yuan has
been expanding its reach since 2020. Visitors and athletes were asked to try
the e-CNY currency at the Winter Olympics this year.
The
Potential
According
to a survey by the Bank for International Settlements released in 2021, about 86%
of central banks were researching the potential of CBDCs, and 60% percent were
experimenting with the technology. Just 14% were deploying pilot projects.
BIS said
that banks are now exploring the potential benefits of CBDCs to help achieve
public good objectives like public trust in money and maintaining price
stability.
The
Study
Nepal
Rastra Bank had launched a preliminary study to launch the digital currency.
Gunakar Bhatta, the spokesperson for the brand, said that it formed a committee
that was led by the bank’s Currency Management Division’s director. The
committee was given one month for the preliminary study.
Want to
know more? Here’s a list of countries developing a Central Bank Digital
Currency.
Sources:
https://news.bitcoin.com/nepal-prepares-to-issue-digital-currency-drafts-necessary-amendments/
https://thepaypers.com/cryptocurrencies/nepal-rastra-bank-prepares-to-launch-its-own-digital-currency--1257902
https://english.onlinekhabar.com/nepal-plans-digital-currency.html