The move towards abolishing the monarchy in Nepal came as part of a peace process that followed a brutal civil war known as the Maoist Insurgency, which lasted from 1996 to 2006. The agreement reached on December 23, 2007, was a landmark decision for the country as it sought to transition from centuries of monarchical rule to a federal democratic republic. The conflict had deeply fractured Nepali society, resulting in thousands of deaths and widespread displacement. The political change was favored by a populace that was increasingly disillusioned with monarchy and yearning for greater democracy and inclusion in governance.

The constituent assembly, composed of representatives from various political parties, was pivotal in this transition. Vote by vote, the assembly debated and formed a consensus on the structure of the new governance, ultimately deciding that the Prime Minister would serve as the head of state. This meant that the Prime Minister, previously seen primarily as the head of government, would now assume greater symbolic powers traditionally held by the monarchy. This decision reflected the strength of democratic ideals among the new political leaders emerging from the conflict and the desire to establish a governance framework that better represented the diverse ethnic groups within Nepal.

The implications of this decision were profound, as it set the stage for the drafting of a new constitution, which would further delineate powers and responsibilities within the new federal structure. This included providing protections for ethnic minority rights and decentralizing authority, aiming to address historical grievances over representation and governance. The transition symbolized a profound shift towards equity and inclusiveness, opening pathways for representation previously denied under the monarchy.