The Bank of the Lao P.D.R. is partnering with Japan’s FinTech company Soramitsu to launch a central bank digital currency (CBDC) pilot project.
The Payment Systems Department of the Bank of the Lao P.D.R. and Soramitsu Co., Ltd. signed a Memorandum of Understanding (MOU) as part of the CBDC pilot project. The Digital Lao Kip (DLak) trial is designed as a proof of concept.
Under the project, the Bank of the Lao P.D.R. will provide digital currency to commercial banks in exchange for fiat, and users will be able to exchange fiat funds for DLak directly through a commercial bank. The citizens will also be able to pay for purchases with the CBDC by scanning a QR code in a special app.
The payment system will allow commercial banks to instantly convert DLak into fiat money, and sellers will get the payment in real time. Moreover, there’s an opportunity within the pilot tests to make transactions with DLak even for those users who don’t have a bank account.
By the way, accessibility is one of the priorities of the Lao digital currency because, according to Nikkei Asia, about 70% of Laotians don’t have bank accounts.
Additionally, the CBDC pilot project of the Bank of the Lao P.D.R. envisions an opportunity to simplify and speed up cross-border transfers for migrants. The country’s government sees DLak as a way to provide economic security through a local currency that doesn’t depend on other countries.
Recall that at least nine of the world’s ten central banks are interested in developing a national digital currency. Read about what successes regulators made in this area in 2022 in a special article by CP Media.