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Nepal Drafts Required Amendments As It Prepares To Issue Digital Currency
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.
Ankita K.
12:56 8th Aug, 2022
Adoption

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.

Nepal Prepares to Issue Digital Currency, Drafts Necessary Amendments
The Nepal Rastra Bank (NRB) was established on April 26, 1956, under the Nepal Rastra Bank Act.

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."

Nepal still has a long way to go but the NRB’s study produced a concept paper which is currently under review at the bank. “We will identify the way forward after the conclusion of ongoing discussions,” said Revati Nepal. “It will be good for Nepal to introduce digital currency with appropriate technology acquired from other nations,” added Prakash Kumar Shrestha, chief of the central bank’s economic research department who pointed to other important aspects that need attention such as cybersecurity.

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