August 6: Nepal Rastra Bank (NRB) has stepped up preparations for issuing digital currency. Due to the interest shown by the general public in virtual transactions and other countries also issuing digital currency, the central bank has started necessary preparations to issue the Central Bank Digital Currency (CBDC).

Nepal Rastra Bank had formed a steering committee under the coordination of Deputy Governor Bam Bahadur Mishra two years ago regarding the digital currency. A group formed by the steering committee under the coordination of director Anuj Dahal to study the prospects of digital currency study had submitted a feasibility study report in the last fiscal year. Based on the recommendations of the group, a separate unit has also been established in the Payment System Department of NRB to work on the digital currency.

NRB Governor Maha Prasad Adhikari had announced in a formal program last Monday that Nepal will issue its own digital currency within the next three years.

According to an official of Nepal Rastra Bank, it will take a long time for the formation of policy as well as legal and infrastructure frameworks for the issuance of the CBDC.

"We are only at the initial stage for the issuance of CBDC," he said, requesting anonymity.

In the feasibility study report carried out by the central nank, it has been mentioned that it would be appropriate to proceed with the CBDC project only by building a separate structure and team with the participation of all stakeholders.

In the initial stage, the study has suggested setting up a small unit within the Payment System Department or the Information Technology Department of the central bank and the work can be carried forward. Similarly, the NRB needs to have high-level technology along with security of data to issue CBDC.

The report also suggested to conduct the detailed feasibility of CBDC, study adequate legal system and to increase public awareness before implementation of the digital currency.

As the economy is gradually transforming from cash to digital, the report states that although electronic currency is necessary, political ownership and public acceptance are equally important for success.

With the increase in public interest in digital currencies including cryptocurrencies issued by the private sector around the world, the central bank has started preparing to issue CBDC.

The Reserve Bank of India (RBI) has already issued digital currency since last November. In the first phase of the currency issued as a pilot project, only wholesale transactions have been arranged with nine commercial banks. Only after its success, India is ready to start retail business to be used by common people.

It is mentioned in the report of the central bank that the use of digital currency will attract common people to electronic payment and the expenses incurred in printing and circulation of notes will be reduced.