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Digital Rupee on the Horizon? A Deep Dive into the Potential and Risks of the National Bank of Nepal’s CBDC for the Country’s Financial System
The global financial system is on the verge of significant transformations, largely driven by the rapid development of digital technologies. One of the most discussed innovations in recent years has been the concept of central bank digital currencies (CBDC). As of March 2024, more than 130 countries, representing over 95% of global GDP, are actively researching, developing, or already piloting CBDCs.1By the end of 2022, 93% of central banks were involved in CBDC work, and it is projected that there could be 15 retail and nine wholesale CBDCs in circulation by 2030. This global momentum underscores the recognition of the importance and potential transformative power of CBDCs, driven by factors such as the rise of private digital currencies and the need to modernize payment systems. Nepal, like many other developing countries, is also exploring the prospects of introducing its own national digital currency, the digital rupee.
CBDCs are of particular interest to developing economies. The motivations for their implementation often include expanding financial inclusion, reducing reliance on cash, and stimulating digital innovation. CBDCs can serve as a digital gateway for the unbanked population, offering services such as payments and savings. Research from the Bank for International Settlements (BIS) shows that developing and emerging market economies (EMDEs) are more likely to focus on retail CBDCs. For countries like Nepal, with their specific challenges in financial inclusion and high cash balances, CBDCs can offer tailored solutions that differ from the motivations of developed economies, which often focus on modernizing payment systems and maintaining monetary sovereignty.
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By Alpha Business MediaThe global financial system is on the verge of significant transformations, largely driven by the rapid development of digital technologies. One of the most discussed innovations in recent years has been the concept of central bank digital currencies (CBDC). As of March 2024, more than 130 countries, representing over 95% of global GDP, are actively researching, developing, or already piloting CBDCs.1By the end of 2022, 93% of central banks were involved in CBDC work, and it is projected that there could be 15 retail and nine wholesale CBDCs in circulation by 2030. This global momentum underscores the recognition of the importance and potential transformative power of CBDCs, driven by factors such as the rise of private digital currencies and the need to modernize payment systems. Nepal, like many other developing countries, is also exploring the prospects of introducing its own national digital currency, the digital rupee.
CBDCs are of particular interest to developing economies. The motivations for their implementation often include expanding financial inclusion, reducing reliance on cash, and stimulating digital innovation. CBDCs can serve as a digital gateway for the unbanked population, offering services such as payments and savings. Research from the Bank for International Settlements (BIS) shows that developing and emerging market economies (EMDEs) are more likely to focus on retail CBDCs. For countries like Nepal, with their specific challenges in financial inclusion and high cash balances, CBDCs can offer tailored solutions that differ from the motivations of developed economies, which often focus on modernizing payment systems and maintaining monetary sovereignty.