As with many developing countries, financial inclusion is the primary motivation for Bhutan’s exploration of a CBDC. The RMA hopes that a digital Ngultrum will accelerate its mission to increase financial inclusion in Bhutan to 85% by 2023. This is bearing in mind that Bhutan has a population of less than one million.
“Our collaboration with Ripple is testament to the potential of CBDCs to provide an alternative and sustainable digital payment instrument in Bhutan,” said Yangchen Tshogyel, deputy governor of RMA.
Developing a CBDC also takes time, and each country has its specific requirements that need bespoke technical features to be trialed. For example, Bhutan’s interest in a CBDC is also likely spurred by the high volumes of remittances that the country receives. While the figure is only $83 million according to the World Bank, the amount represents more than 3% of the country’s GDP of $2.5 billion. That’s a higher GDP percentage than the world’s largest remittance recipient, India.
“Ripple’s groundbreaking technology will allow for the experimentation of a CBDC with our existing payments infrastructure—while ensuring efficient and cost-effective cross-border transfers,” added Tshogyel.
At this stage, the RMA plans to pilot retail, cross-border and wholesale payment use cases for its digital Ngultrum.
Meanwhile, on the topic of cross border CBDC projects, four major Asian central banks – China, Hong Kong, Thailand and the UAE – are presently collaborating with the Bank of International Settlements on the M-CBDC Bridge Project. And another four countries, Singapore, Malaysia, Australia and South Africa are participating in Project Dunbar with similar goals.
Last week, Turkey’s central bank also announced it had commenced the next stage of its CBDC research with its Digital Turkish Lira Collaboration Platform.