Nepal to Issue Digital Currency Soon

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. 


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