Finance Minister Dr. Swarnim Wagle Emphasizes Need to Amend Nepal Rastra Bank Act, 2058 for Autonomy and Modernization

Kathmandu. Finance Minister Dr. Swarnim Wagle has stated that amending the 'Nepal Rastra Bank Act, 2058' is essential to make Nepal Rastra Bank more autonomous, professional, and technology-friendly. He clarified that the Act is being amended based on the evolving economic landscape and technological advancements while participating in the preliminary discussion on the bill in the Finance Committee under the House of Representatives. Finance Minister Wagle mentioned that this amendment will address the reform commitments made during the Extended Credit Facility (ECF) from the International Monetary Fund (IMF) at a time when Nepal's balance of payments was under pressure during the COVID-19 pandemic. He stated that such reforms are being advanced for economic and financial stability based on the suggestions of international organizations, as Nepal is also a member state of the IMF, and the country's own needs. Discussing the autonomy of the central bank, Minister Wagle emphasized the need to keep the Rastra Bank free from political interference. He clarified that although the Finance Secretary will be on the board for coordination between the government's fiscal policy and the Rastra Bank's monetary policy, the bank's independence will be preserved. Digital Currency and Structural Reforms Legally Recognized Minister Wagle informed that the bill proposes to legally incorporate the concept of 'digital currency' with the rapid development of technology. According to him, the proposed amendment further clarifies the definitions of terms such as financial institutions, currency, monetary liabilities, and debt instruments. Additionally, it is proposed to update the provisions related to the appointment and dismissal of the Governor and Directors, the functions, duties, and authority of the Board of Directors, and the calculation of net income and distributable income in line with the times. The bill also seeks to systematize provisions such as the issuance of banknotes and coins, security arrangements, and the non-accountability for acts done in good faith by Rastra Bank employees. The Finance Minister stated that the basic structure and objectives of the existing Act have not been fundamentally changed, and only the procedures and modern requirements have been modified. Central Bank Should Be Independent of Political Cycles Speaking about the autonomy of the Rastra Bank and coordination with the government, Finance Minister Wagle said, 'The Nepal Rastra Bank Act, 2058 laid an important foundation for strengthening the autonomy of the central bank. It provided an environment for the Rastra Bank to work independently, especially by protecting the appointment of the Governor from political interference.' He pointed out the necessity of coordination between the Ministry of Finance and the Rastra Bank, adding, 'In a country like ours, the provision of the Finance Secretary being on the board ensures the necessary coordination between the government's fiscal policy and the Rastra Bank's monetary policy. According to global recognition, the central bank should be somewhat independent of political cycles, but it should work towards common objectives such as price stability, economic stability, and growth in production and employment by coordinating with the government.' Regarding the timely use of technology and future plans, he said, 'Currently, due to the rapid development of digital technology, digital payment systems, and new practices such as digital currency issued by the central bank, it has become necessary to update the Rastra Bank's law accordingly. With this necessity and reforms as a basis, the amendment bill has been introduced with the objective of modifying the board's structure, relationship with the government, and the qualifications of officials.' Finance Minister Wagle stated that the government will take the amendments and suggestions put forth by the parliamentarians in the committee positively and pledged that the bill will be further refined through clause-wise discussions in the committee, which functions as a 'mini parliament.'