November 4: Nepal Rastra Bank (NRB) has started preparations to issue its own digital currency within the current fiscal year. Due to the trend of issuing electronic currency by central banks around the world, NRB also initiated the process of issuing the Central Bank Digital Currency (CBDC) in Nepal.

NRB has completed the feasibility study for issuing CBDC and is collecting opinions and suggestions from stakeholders. Officials of NRB say that they are working to issue electronic currency within the current fiscal year by taking into account the opinions and suggestions of the stakeholders. According to an official of NRB’s Currency Management Department, the central bank is under pressure to issue CBDC because the central banks of the world are rapidly issuing such currencies.

“We are working with the goal of issuing them within this year,” said the official.

NRB Spokesperson Dr Gunakar Bhatta says that it is not possible to determine the timing of issuing CBDC. He added that the feasibility study has been complete and the NRB is still in the process of further study.

During last year's monetary policy, NRB aimed to study the potential of digital currency. It also formed a steering committee under the coordination of Deputy Governor Bam Bahadur Mishra to advance the work of CBDC. The committee had submitted the feasibility study report for the CBDC at the end of last fiscal year. NRB published the feasibility study report recently and asked for opinions from stakeholders. It says that stakeholders can make suggestions on the report by the end of January.

The report has suggested NRB to proceed with the CBDC project only by building a separate structure and team with the participation of stakeholders. At the initial stage, it is suggested that a small unit can be set up within the Payment System Department or the Information Technology Department of NRB. Similarly, the need to build high-level technology and develop the capacity of NRB to issue CBDC with security of data is also pointed out in the report.

Likewise, the report has also pointed out the need to carry out feasibility studies, adequate legal arrangements, target setting as well as public awareness work before implementation.

Central banks around the world started issuing digital currencies due to the increasing interest of the general public in digital currencies, including cryptocurrencies. 

The Reserve Bank of India (RBI) also issued digital currency for the first time on Tuesday. In the first phase of the currency issued as a pilot project, only wholesale transactions are arranged with nine commercial banks. RBI is set to take it to the retail business for the common people only after its success. NRB informed that the use of digital currency will attract the common people to electronic payments and help reduce the expenses incurred in printing and circulation of notes.