Is demonetization possible in Nepal?
Summary
Parliament has revived debate over whether Nepal should withdraw Rs 500 and Rs 1,000 notes to force undeclared wealth into the banking system ahead of provincial and local elections. Nepal Rastra Bank and Finance Minister Dr Swarnim Wagle say there is no current plan, warning that such a move could disrupt remittances, confidence in banks and the wider economy.
Key Points
- Lawmakers have urged the government to consider withdrawing Rs 500 and Rs 1,000 notes, reviving debate over demonetization in Nepal.
- Finance Minister Dr Swarnim Wagle and Nepal Rastra Bank officials say the government has no plan for demonetization and that current conditions do not justify it.
- Economists warn that black money is often held in assets other than cash, so demonetization may not achieve its intended goal and could harm remittances and financial stability.
- Nepal’s open border with India, limited administrative capacity and dependence on foreign printers for banknotes would make implementation difficult.
