The NRB study suggested creating a separate structure and team to advance the CBDC project. Guru Prasad Paudel, Head of NRB’s Payment Systems Department, said the digital currency will be introduced in pilot testing in the next one-and-a-half years. “We will manage the necessary human resources required for digital currency. Once the necessary infrastructure is ready, we will start the tests,” he said.
The central bank had initiated the study on digital currency as per the Monetary Policy of FY 2021/22 which states that a feasibility study for digital currency in Nepal will be conducted in the context of ongoing worldwide studies regarding the usage and feasibility of electronic currency. With the majority of central banks around the world exploring central bank digital currency (CBDC) options, the NRB also formed a steering committee headed by Deputy Governor Bam Bahadur Mishra to make necessary recommendations regarding digital currency. A CBDC is the digital form of a country's fiat currency. Like the fiat currency, CBDC is also issued by the nation's monetary authority. It is considered a form of legal tender that can be used for the exchange of goods and services. Of late, many countries are exploring how CBDCs may affect their economies, financial networks, and stability as CBDCs have the potential to reshape the payments industry. A 2021 Bank for International Settlements (BIS) survey of central banks found that 86 percent are actively researching the potential for CBDCs, 60 percent were experimenting with the technology and 14 percent were deploying pilot projects. According to international media reports, China launched e-CNY in 2020, Hong Kong Monetary Authority (HKMA) commenced e-HKD pilot program in 2023 and the Reserve Bank of Australia commenced a retail CBDC pilot in 2023, with a report due mid-2023. In China, the People’s Bank of China (PBOC), the Chinese central bank, started the pilot project on e-CNY in four major cities, namely Shenzhen, Suzhou, Xiongan, and Chengdu. Since the start of the pilot project, the value of transactions made using e-CNY has surpassed 100 billion yuan, and PBOC has expanded the pilot to include the entirety of four provinces - Guangdong, Jiangsu, Hebei, and Sichuan. By the end of 2022, PBOC reported that there were 13.61 billion yuan of e-CNY in circulation, representing 0.15 percent of the total volume of yuan in circulation. While China is yet to announce the date for the nationwide launch of e-CNY, however, companies including Alibaba and Tencent have integrated e-CNY into their systems as a payment option. In Hong Kong, the HKMA on 18 May 2023, announced the commencement of the e-HKD pilot program, with 16 firms selected to participate. While the United States Federal Reserve has made no decisions on whether to pursue a US CBDC, however, it has been exploring the potential benefits and risks of CBDCs. The Federal Reserve in January 2022, released a discussion paper examining the pros and cons of a potential retail CBDC. The Central Bank of the Bahamas was the first central bank to introduce a full-fledged CBDC in October 2020- the Sand Dollar. The Eastern Caribbean Currency Union, consisting of Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, Saint Lucia, and St. Vincent and the Grenadines, launched its digital currency in March 2021.
