Thukten Zangpo
The central bank, Royal Monetary Authority (RMA), has initiated a pilot programme for a central bank digital currency (CBDC) in a controlled and experimental environment, focusing on both technological and policy-level exploration to pave the way for the future of digital payments in Bhutan.
The CBDC is perceived as the future currency and an economical approach for offline payments, improving payments efficiency, and tourism payments in the country.
The pilot program involves several phases, including technological setup, sandbox experimentation, field testing of use cases, and rigorous security testing.
Once a prototype is finalised, the CBDC will undergo real-world testing in a controlled environment, where end users will provide feedback on its design and usability.
The pilot programme is expected to provide insights into user assumptions regarding the design features of the CBDC.
Key activities during the phase include defining the scope and use cases, integrating with financial service providers, establishing evaluation criteria, and engaging with relevant stakeholders.
The RMA also said that its infrastructure and network will be designed, developed, and deployed in a pilot phase with selected participants.
The RMA has also planned for user acceptance testing and a final evaluation of the pilot to assess its impact on monetary policy, financial stability, and existing legal frameworks.
If successful, a soft launch will follow, introducing the CBDC to a select group of users before a full-scale national rollout.
This phased approach aims to gather practical insights and refine the digital ngultrum to ensure it meets user needs and supports Bhutan’s broader financial ecosystem.
The final step would be the nationwide roll-out of the CBDC, bringing this transformative financial tool directly to the public and reshaping the future of payments. The timeline for the rollout remains undetermined.
An observer said that the CBDC is being explored by many countries, and it will be regulated by the government while enjoying some of the benefits of the cryptocurrency like Bitcoin.
“Our existing bank accounts for fiat currency like our normal ngultrum are held in the centralised database of our banks like Bank of Bhutan Limited and Bhutan National Bank Limited. With CBDC, the banks’ roles may become less because banks are just intermediaries,” he added.
If a financial crisis occurs, people may perceive CBDC as safer than traditional bank deposits. Consequently, they might shift their funds towards CBDC, potentially weakening banks by reducing their deposit base.
In addition, an observer said that online transactions may become easier and cheaper, especially transferring money across different countries.