Nepal Rastra Bank Set to Launch Nepali Digital Currency (NDC)

The Nepal Rastra Bank (NRB), the central bank of Nepal, has announced its plans to introduce a Central Bank Digital Currency (CBDC) called the Nepali Digital Currency (NDC). This move aims to modernize the financial landscape of Nepal.

The NDC will be a digital representation of the Nepalese rupee and will be issued by the NRB. It will enjoy the full backing and support of the government of Nepal. Access to the NDC will be available to all citizens and residents of the country.

Nepal Rastra Bank Digital Currency

The NRB anticipates several advantages with the implementation of the NDC, including:

1. Enhanced Financial Inclusion: The NDC will facilitate greater participation in the financial system, particularly for individuals who lack access to traditional banking services.
2. Reduced Payment Costs: The NDC is expected to offer a more efficient and cost-effective method for making payments compared to cash or checks. This could result in decreased transaction costs for both businesses and consumers.
3. Improved Monetary Policy: Leveraging the NDC, the NRB will have the ability to implement monetary policies more effectively. For instance, during times of financial crises, the NDC can be utilized to infuse liquidity into the banking system.

The development of the NDC is currently underway, with a pilot phase scheduled to launch in 2023. The full-scale implementation of the NDC is planned for 2024.

The introduction of the NDC signifies a significant step forward for the Nepali economy, as it demonstrates the NRB’s commitment to promoting financial inclusion and enhancing the efficiency of the financial system. This digital currency has the potential to revolutionize payment methods and financial participation in Nepal.

Key details about the NDC include:

• Wholesale CBDC: The NDC will initially be available exclusively to financial institutions.
• Distributed Ledger Technology: The NDC will be issued on a distributed ledger technology platform.
• Full Government Backing: The NDC will be fully backed by the government of Nepal.
• Interoperability: The NDC will be designed to work seamlessly with other CBDCs.
• Regulatory Compliance: The NDC will be subject to the same Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations as other forms of currency.

To ensure the technical feasibility of the NDC and gather user feedback, the NRB is conducting various pilot projects. These pilots will be instrumental in assessing the effectiveness of the NDC. The NRB intends to introduce a limited-scale rollout of the NDC in 2023, followed by a complete rollout in 2024.