In August 2022, Nepal Rastra Bank (NRB), the central bank of the Himalayan nation, made an intriguing announcement—it was contemplating the creation of a central bank digital currency (CBDC). However, at present, the bank finds itself in the initial stages of this monumental undertaking.
In a candid interview, a spokesperson from NRB shed light on the matter, stating, “We are in the initial phase of the study. That means once the study concludes, perhaps after a year or two – considering the necessary steps and modalities – we will determine whether CBDC is a viable option for our nation. But for now, we are firmly on track.”
According to the spokesperson, the feasibility of wholesale CBDC deployment is under consideration, contingent upon recommendations from relevant institutions. To make this a reality, amendments to two crucial acts, namely the National Central Bank Act and the Banks and Financial Institutions Act (BFIA), are required.
The NRB took its first step towards this endeavor by urging the country’s lawmakers to revise the Nepal Rastra Bank Act in August 2022. This step marked a departure from the act’s previous focus, which primarily governed the issuance of physical currency.
It’s worth noting that since September 2021, the NRB has imposed a ban on the trading and mining of cryptocurrencies within Nepal’s borders. The bank has actively discouraged residents from participating in any crypto-related activities and warned of the consequences of non-compliance.
As of now, all forms of cryptocurrency, including stablecoins, remain prohibited in Nepal. However, the nation is preparing to collaborate with its two significant neighbors, India and China, to facilitate cross-border transactions involving the envisioned CBDC.
The journey towards a Nepal CBDC is undeniably in its infancy, but its potential implications for the country’s financial landscape are nothing short of transformative. As NRB navigates this uncharted territory, the world watches with keen interest to see if a digital revolution is on the horizon for Nepal’s financial sector.