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Nepal Prepares To Issue Digital Currency, Drafts Necessary Changes – Finance Bitcoin News
A working group in Nepal has proposed legal changes that would allow 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 empower the regulator to proceed with its implementation.
Nepal’s central bank prepares legal basis for national digital currency
The Nepal Rastra Bank (NRB) is ready with revisions to the law determining its powers and responsibilities that will allow the monetary authority to issue a digital version of the country’s fiat currency, the Nepalese rupee. The news follows a study which concludes that a central bank digital currency (CBDC) is a feasible project.
According to Revati Nepal, head of the bank’s foreign exchange management department, a working group has already drawn up a proposal for change. “After internal discussions, we will send the bill to the government to table it in parliament,” he added, as quoted by the Kathmandu Post on Sunday. The changes will be made in the Nepal Rastra Bank Act of 2002.
The study on the matter was announced with NRB’s Monetary Policy 2021-22 paper. A team led by Revati Nepal suggested that before the development of the CBDC, the regulator would have to introduce the legal provisions that would allow it to implement it.
The experts have now proposed concrete steps to move forward, including the preparation of a legal framework for the digital currency. “There are proposals for technical and financial issues that need 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 can be carried out. “Steps will also be taken to explore interoperability with the digital payment service providers,” Nepal elaborated.
Kathmandu Not in Rush, want to see how China and India are doing with their CBDCs
The executive made it clear that Nepal Rastra Bank is in no rush to issue the digital currency. The monetary authority of the Himalayan nation first wants to observe how neighboring countries in South Asia, including India and China, proceed to introduce their CBDCs. Nepal emphasized:
We do not want to take the unnecessary risk of rushing to introduce digital currency.
The finance minister of Nepal’s southern neighbor, Nirmala Sitharaman, announced in February that the world’s most populous democracy plans to launch a digital version of its currency during the next fiscal year, which began on April 1. Thus, it is set to become one. of the largest economies to introduce a digital currency with the Reserve Bank of India (RBI) expected to roll it out in 2023.
Nepal’s other powerful neighbor, China, has been exploring the potential of a CBDC since 2014 and is already conducting trials. Cities such as Shenzhen, Suzhou and Chengdu became the scene of the first launch of its digital yuan in 2020. The tests were then expanded to more regions, including Hainan province, Shanghai and a number of other cities in 2021. The People’s Bank of China offered athletes and visitors a chance to try the e-CNY currency at the Winter Olympics this year.
Various types of digital currencies, including decentralized cryptocurrencies such as bitcoin, have been in circulation for many years now. However, most governments are in the early stages of developing government-issued digital currencies. According to a Bank for International Settlements survey released in 2021, 86% of central banks investigated the potential of CBDC, 60% experimented with the technology and only 14 percent implemented pilot projects.
Nepal still has a long way to go, but NRB’s study produced a concept paper that is currently under consideration by the bank. “We will identify the way forward after the conclusion of ongoing discussions,” Revati Nepal said. “It will be good for Nepal to introduce digital currency with appropriate technology acquired from other nations,” added Prakash Kumar Shrestha, head of the central bank’s economic research department, pointing to other important aspects that need attention, such as cyber security.
Do you think Nepal will catch up with its neighbors in developing a national digital currency? Tell us in the comments section below.
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