Nepal CBDC: Peg with INR — Should NPR Stay Pegged? Benefits & Planning

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Executive highlights from Nepal Rastra Bank (NRB)

“Considering the three highly desirable policy goals and a moderately desirable policy goal (i.e., promoting financial inclusion), this study suggests that a retail, intermediated, and semi-centralized infrastructure-based CBDC with both account-based and token-based access is suitable for Nepal. It also recommends making the CBDC interoperable with other domestic payment systems, non-remunerative, 24/7 hours available for use, quantity-restrictive, and programmable for broader usage options.” — Nepal Rastra Bank

“This study recommends to empower NRB to issue digital legal tender, and operate accounts for individuals and others with a targeted reform of NRB Act 2002, promulgate a new unified act to govern digital currency-related data protection issues, develop a robust framework to regulate and supervise the parties involved in the implementation of CBDC system.” — Nepal Rastra Bank

Why Nepal might consider a CBDC (press & commentary)

“Introducing a digital version of the Nepali rupee, which is programmable and issued by the central bank, can help us improve our financial system and prepare for the future in several ways.” — The Kathmandu Post

“A CBDC can play a major role in improving financial access. … New technology has made it possible for CBDCs to work offline. This is important in Nepal’s rural areas with limited or unreliable internet access.” — The Kathmandu Post

“Remittances—money sent home from Nepalis working abroad—are one of the most significant sources of income for our economy. The way money moves across borders is changing fast, with blockchain playing a more substantial role in making these payments faster, cheaper and more secure.” — The Kathmandu Post

Background on the NPR–INR peg

“The NPR is pegged to the Indian rupee (INR) at 1.6 NPR to 1 INR. The NPR is closely tied to India’s economy, and is available in coins and banknotes… The peg helps maintain exchange rate stability but limits Nepal’s monetary flexibility.” — Investopedia

NRB analysis — priority CBDC policy goals for Nepal (summary)

“The heat map shows that improving access to payment, enhancing the resilience of the payment system, and reducing currency management costs could be the first three highly desirable policy goals for CBDC… Other policy goals such as promoting financial inclusion, supporting the government for welfare distribution, promoting financial transparency, and promoting financial stability have been identified as moderately desirable policy goals for CBDC… The other policy goals such as enhancing the efficiency of the cross-border payment systems, safeguarding the central bank’s monetary sovereignty, and improving the monetary policy transmission mechanism seem to be less desirable policy goals for CBDC in Nepal.” — Nepal Rastra Bank

Practical planning notes from NRB (excerpts)

“This study recommends that NRB should form a dedicated team or unit for studying and managing the CBDC, formulate the strategic plans, conduct a detailed feasibility study of CBDC, ensure an adequate legal framework, select appropriate policy goals for CBDC, adopt a robust CBDC system, develop the capacity of NRB, and restructure where necessary, coordinate with other authorities and agencies for necessary support, increase public awareness, and regularly promote digital banking within Nepal to make public adoption of digital currency convenient in the future.” — Nepal Rastra Bank

“Moreover, this study recommends developing a prototype CBDC in the beginning with the help of domestic developers, consultants, and system experts, and simulating such a CBDC in a closely controlled environment before developing and launching a real one which helps rightly design, develop and implement the final CBDC.” — Nepal Rastra Bank

Visual context

Nepalese rupee — background image
Nepalese rupee — background image1500×1000 340 KB

Source: Investopedia

:speech_balloon: Share Your Thoughts

  • What impact would keeping or removing the 1.6 NPR = 1 INR peg have on CBDC design and Nepal’s economic stability?
  • If NRB issues a retail CBDC (intermediated + semi-centralized), which benefits matter most to you: access in rural areas, lower currency management costs, or faster remittances?
  • What legal or data‑protection priorities should Nepal address first to enable a safe CBDC rollout?
  • How should NRB balance interoperability with India (cross-border convenience) against risks to monetary sovereignty?
  • Would you prefer a phased approach (wholesale pilot → retail rollout) or a rapid nationwide launch? Cite practical reasons.

References