CBDC: Nepal To Issue Its Own Digital Currency, Prepares Legal Changes

 

Nepal wishes to see how its neighbouring nations, including India and China, implement their own CBDCs first before issuing the country’s own digital Nepalese rupee.

Nepal’s central bank, the Nepal Rastra Bank (NRB), is preparing to launch its own central bank digital currency (CBDC) soon. Following a study that noted that the introduction of a CBDC is indeed a feasible project, the NRB said it is ready with revisions to the Nepal Rastra Bank Act, 2002, that would allow it to issue a digital variant of its fiat currency, the Nepalese rupee. CBDCs are state-issued digital currencies that are meant to function just like any regular fiat currency would, but will exist on a blockchain, just like cryptocurrencies do.

As quoted by a Kathmandu Post report, NRB’s deputy director Revati Prasad Nepal said, “After internal discussions, we will send the bill to the government to table it in parliament.” Following the study results announced in NRB’s Monetary Policy 2021-22, the central bank will need to introduce legal provisions to be able to issue a CBDC. “There are suggestions for technical and economic issues to be considered,” the NRB official added

The NRB will also take measures to explore “interoperability with digital payment service providers” as it plans to launch a digital wallet to enable CBDC transactions. 

However, Nepal said that the NRB is in no hurry. “We don’t want to take the unnecessary risk by rushing into introducing digital currency,” the official said, adding that the country first wishes to observe how its neighbours, including India and China, implement their own CBDCs.

In India, Finance Minister Nirmala Sitharaman announced in February that it will launch a ‘digital rupee’ sometime this financial year. Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar said that the "process of introduction" will be a gradual process, to ensure smooth implementation and operations.

China, on the other hand, has been exploring CBDCs since 2014. A digital yuan has already been launched as part of trials in 2020 in cities such as Chengdu and Shenzhen, with more cities like Shanghai being added to the trials in 2021. During the Winter Olympics this year, athletes and visitors got a chance to try out the e-CNY themselves.

As per a survey conducted by the Bank of International Settlements, nearly 90 percent of central banks across the world are involved in work related to CBDC, and one-fourth of them are either developing their digital currency or are in the advanced stage of running a pilot already.