Over the last months, CBDCs (Central Bank Digital Currencies) have been the latest development among central banks. Nepal plans to ride on the current wave to launch its CBDC.
Nepal’s central bank, Nepal Rastra Bank (NRB), has called for a review of existing legislation. This legislation governs its responsibilities, powers, and operations.
NRB Creates Task Force To Draft Amendment
According to The Kathmandu Post, the NRB Act 2022 only allows the bank to issue coins and paper notes. It does not have a provision for the issuance of a digital currency.
Revati, a top executive at the NRB, said the bank has formed a task force. The duty of the task force is to draft an amendment to existing legislation.
This amendment would allow the central bank to introduce digital currencies. The bank said it would send the bill to the parliament after an internal debate.
Before creating the task force, the country had plans to issue a CBDC. The senior executive led a team which surveyed the potential of a CBDC in Nepal.
The report said having a CBDC is beneficial, but there are some economic considerations to handle. Revati also talked about the technical aspect of digital currency.
He advised the bank to use a special wallet for electronic banking transactions. He also said the bank should explore interoperability using payment service firms.
Although CBDC development is moving fast in other nations, Nepal has decided to go slow on its CBDC project. The country believes it must create an infrastructure that would first support digital currencies.
Nepal Takes It Slow On CBDC Development
Prakash Kumar Shrestha, NRB’s head of economic research, states that the country must first consider cybersecurity before introducing virtual currencies.
Shrestha added that strengthening the nation’s cybersecurity is paramount. The Country acknowledged Shrestha’s statement saying the central bank would not rush its CBDC initiative.
Meanwhile, financial experts in the country have advised policymakers on a CBDC launch. They believe the country can learn from other nations that have launched CBDCs.
India, a neighboring country to Nepal, has made progress on its CBDC launch. They believe Nepal can observe the country’s progress.
Another country that Nepal can learn from is China. China has attained great heights in terms of CBDC development. The country recently expanded the cities for its digital Yuan project.
According to economic data, Nepal is easy to enter the world of digital currencies. The country’s electronic banking system has risen dramatically. As per The Kathmandu Post, the electronic banking sector has recorded transactions worth billions.