According to Nikkei Finance, the country of Laos is considering issuing its own digital currency, for which it has enlisted a Japanese fintech startup Soramitsu to help with background study and research.
Japan Comes Aboard Laos CBDC Initiative
Nikkei Finance has reported that the Bank of the Lao People’s Democratic Republic recently signed a memorandum of understanding with the Japan International Cooperation Agency to study the development of a central bank digital currency, i.e., a digital version of the kip (Laos’s currency). Soramitsu, the Tokyo-based financial technology startup that has been roped in to conduct the study, had previously played a role in developing the Cambodian digital payment system.
Soramitsu – CBDC Expert In SE Asia?
In a press release on the Soramitsu website, the company has spoken about its work in developing the ‘Bakong’ digital currency in Cambodia,
“Thanks to the implementation of Bakong within local banking apps, 5.9 million users have benefitted from this service within the first six months of 2021. Users of Bakong’s digital wallet have reached the 200,000 mark and over 1.4million transactions, an equivalent of $500 million have been recorded in the same time period.”
The study, which is scheduled to commence from this month, will be assessing the roles of banks and other financial intermediaries to gauge the country’s needs for financial inclusiveness. If all goes well, Soramitsu might play a bigger role in the development of the digital currency.
Competing With Digital Yuan
China is Laos’s second-largest trading partner and is also in the process of developing its own CBDC. With the potential of the digital Chinese yuan looming in the future, Laos is joining other Southeast Asian nations to develop a digital version of their own currencies. In fact, some of these countries’ central banks are going one step further than digital currencies by looking into cross-border remittances through multiple CBDCs and CBDC bridges. Ideally, it would help policymakers gather data needed to assess fiscal factors like the amount of cash in circulation.
Additionally, the Laotian CBDC could moderate the effects of inflation that has hit the Laotian currency of kip and provide a safe cash-based economy for the citizens.
State Of Cryptocurrency In Laos
The Laotian government has recently shifted its stance to present a more welcoming visage to cryptocurrencies. The country’s numerous waterfalls have contributed to its hydroelectric power potential. Finding alternate energy sources for BTC should not be an issue in the country. Six companies have already received permission to mine and trade in Bitcoin in the country. It could thus safely be assumed that the Laos CBDC program has the potential to go all the way.
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