Ayush Poudyal | October 2026
Finance and technology have always been twins, not recent friends. Professor Walker observes that clay tokens, tablets, and early writing grew out of counting and accounting in ancient Mesopotamia (the land between the Tigris and Euphrates rivers, in present-day Iraq), so mathematics and writing both began as finance. Every leap since, from double-entry bookkeeping (recording each deal twice, once as money in and once as money out) to blockchain (a shared digital record book copied across many computers), has redrawn who may hold, move, and trust money. Central bank digital currency (CBDC) is the newest chapter. It is a country’s own money in digital form, issued directly by its central bank, like a banknote that lives inside a phone.
Nepal Rastra Bank (NRB), the country’s central bank, has entered this contest cautiously. Its roadmap sets a wholesale CBDC pilot for interbank settlement in August 2026, a cross-border decision in December 2026, and a retail decision from June 2027. Wholesale CBDC is digital money that only banks and financial institutions use to settle payments with one another (interbank settlement), while retail CBDC is the version ordinary people would carry. A prototype built on Hyperledger Fabric, an open-source tool for building a blockchain that only approved participants may join, already exists and is designed for both uses. Whether the pilot has begun is unconfirmed, so these dates are plans, not outcomes.
Beginning with wholesale is sensible. Walker emphasizes that the central bank would carry the risks of hacking and system failure for a CBDC. He adds that if people move their savings from bank deposits into a CBDC too quickly, the banking system could become unstable. Testing among a handful of institutions therefore lets NRB build its capabilities before the savings of millions of households are put at risk. Nepal also has a legal gap. According to one news report, the NRB Act recognizes only physical notes and coins as legal tender, meaning money that the law requires people to accept as payment. A ledger entry (a line in a digital record book) cannot yet be called money, so the law needs to catch up with the technology.
Retail CBDC will decide whether the financially excluded, meaning people with no access to a formal bank account, can enter the banking system. According to Tan’s model, a developing country can draw such people in through a CBDC. In a two-tier design, where the central bank issues digital money to banks and the banks pass it on to the public, a person needs a bank account before opening a wallet, an app on a phone that holds digital money. Because wallets require accounts, bank deposits grow and banks can lend more. The payment records these wallets create also narrow the information gaps about credit risk (a lender’s difficulty in judging whether a stranger will repay), which have long shut deserving borrowers out.
Conversely, Tan’s model also shows that if non-bank payment providers, such as mobile wallet companies, are allowed to distribute CBDC, fewer of these new savers will deposit money in banks. This is called disintermediation: banks lose their role as the middleman between savers and borrowers. For Nepal, therefore, choosing the distribution channel is itself a policy decision. Distributing CBDC only through banks gives commercial banks more money to lend. Allowing wallet companies to distribute it reaches more households in remote hill areas and the Tarai (Nepal’s southern plains) but lowers deposits. A middle path would be to pilot a hybrid approach, in which wallet companies distribute CBDC under tiered holding limits (caps on how much one person may hold, set in levels) while commercial banks keep the relationship with the account holder. This hybrid is the author’s own proposal and remains untested.
Nepal’s neighbors raise the stakes. Former Governor Maha Prasad Adhikari has pointed to a signed regulatory understanding with India’s central bank to link Nepal’s National Payments Interface with India’s UPI (Unified Payments Interface, an instant mobile payment system). Walker cites mBridge, a project in which several central banks test settling payments across borders using their digital currencies, as an example of multi-CBDC initiatives. A rupee-based CBDC that settles across borders without a chain of correspondent banks (the foreign middleman banks that relay payments between banks with no direct link) would be nothing short of revolutionary for a landlocked economy.
Nepal should therefore view CBDC as inclusion infrastructure, not simply digital currency. The ancient clay token carried a promise. Nepal’s task is to make the digital rupee keep that promise in every valley.
Ayush Poudyal works as a junior research assistant at IIDS.
The views and opinions expressed in these articles—authored by IIDS interns and staff—are solely those of the individual writers and do not necessarily reflect the official policy, position, or endorsement of the Institute for Integrated Development Studies (IIDS).