Soramitsu announced on February 6 that it has signed a memorandum of understanding (MOU) with the Lao Central Bank Payments and Payments Department for a proof-of-concept (PoC) of the central bank digital currency (CBDC).
Using the system developed by the company, the Lao Central Bank started a CBDC demonstration experiment on February 7, including payments at stores in the capital city of Vientiane. Based on the results of the demonstration experiment, the Lao Central Bank will further advance research toward the official start of CBDC operation.
According to the release, Soramitsu will conduct a feasibility study on blockchain-based payment infrastructure in Laos for one year from December 2021 under a project initiated by the Japan International Cooperation Agency (JICA). After that, we continued research on CBDC jointly with the Lao Central Bank, and reached an agreement to start a CBDC demonstration experiment.
The project name of the demonstration experiment is “DLAK” (Digital Lao Kip).
From February 7, officials from the Lao Central Bank, the Embassy of Japan in Laos, and JICA will participate in the CBDC demonstration experiment at stores in Vientiane. For this demonstration experiment, a modified system for Laos will be used based on the “Bakong” system, which has been operating smoothly for more than two years since official operation began in Cambodia in October 2020. .
The following three objectives are cited as the objectives of the Lao Central Bank’s implementation of CBDC.
- Providing financial inclusion to the broader public to provide digital financial services to those without access to bank accounts.
- Reduction of remittance time and remittance cost for international remittance from immigration destinations such as neighboring countries.
- CBDC promotes the sophistication of payment systems, such as securing economic security through currencies that do not depend on other countries.
The results of the demonstration experiment will be used to improve CBDC requirements, find solutions to challenges in the financial situation in Laos, and be used by the Central Bank of Laos to consider the official launch of CBDC.
｜Editing: Takayuki Masuda
｜ Top image: Release materials
