A task force in Nepal has proposed legal changes allowing the country’s central bank to issue its own digital currency. The move comes after a study indicated that such an initiative is feasible and recommended certain provisions that would authorize the regulator to proceed with its realization.
Nepal Central Bank Prepares Legal Ground for National Digital Currency
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.
Kathmandu Not in Rush, Wants to See How China and India Are Doing With Their CBDCs
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.
The finance minister of Nepal’s southern neighbor, Nirmala Sitharaman, announced in February that the world’s most…
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