Nepal Drafts Amendment Bill to Prepare for Issuance of CBDC

The Nepal Rastra Bank (NRB) is ready with revisions to the law determining its powers and responsibilities that would allow the monetary authority to issue a digital version of the country's fiat currency, the Nepalese rupee. The news follows a study concluding that a central bank digital currency (CBDC) is a feasible project.

According to Revati Nepal, chief of the bank's Currency Management Department, a task force has already drafted an amendment bill. "After internal discussions, we will send the bill to the government to table it in parliament," he added, quoted by the Kathmandu Post on Sunday. The changes will be made to the Nepal Rastra Bank Act from 2002.

The study on the matter was announced with the NRB's Monetary Policy 2021-22 paper. A team headed by Revati Nepal suggested that before developing the CBDC, the regulator needed to introduce the legal provisions that would allow it to implement it.

The experts have now proposed concrete steps to move ahead, including the preparation of a legal framework for the digital currency. "There are suggestions for technical and economic issues to be considered," the NRB official said.

The central bank intends to design a separate digital wallet for the CBDC through which digital banking transactions could be carried out. "Measures will also be taken to explore interoperability with the digital payment service providers," Nepal elaborated.

The executive made it clear that the Nepal Rastra Bank is not in a hurry to issue the digital currency. The monetary authority of the Himalayan nation wants to first observe how neighboring countries in South Asia, including 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."