Japanese financial software company Soramitsu has announced the signing of a memorandum of understanding with the Payment Systems Department of the Bank of the Lao PDR on launching a proof-of-concept project for a central bank-issued digital currency (CBDC). ) local. Under the agreement, a digital form of the Laotian kip, called DLak, will be launched on February 7.
According to an explanatory video, the central bank would provide DLak to commercial banks in exchange for fiat currency, and the user would exchange current money for DLak at the commercial bank. The user would then shop at participating vendors using a QR code and an app.
The DLak would be instantly converted into current money by a commercial bank, allowing sellers to be paid in real time. Previously, a digital transaction in Laos took up to a month to settle.
BREAKING: The Bank of the #Lao PDR Payment Systems Department and #SORAMITSU Co., Ltd have signed an MOU for a #CBDC Proof of Concept ⛩ #DLak #LaoPDR pic.twitter.com/12S74IIvm4
— ソラミツ SORAMITSU | 7 YEARS 2016-2023 (@soramitsu_co) February 6, 2023
Apparently, the user will not be required to have a bank account to transact with DLak. The financial inclusion of people without a bank account is one of the declared objectives of the project. According to Nikkei Asia, around 70% of Laotians do not have a bank account.
The DLak project was modeled on the Cambodian Bakong system, launched in collaboration with Soramitsu in 2020. That system was not described as a CBDC. The Bakong system got 200,000 users in a few months and began experimenting with cross-border transactions in 2021.
Simplifying remittances from abroad is also an objective of the DLak. Besides:
“CBDC is a way to advance the sophistication of payment systems, as well as to guarantee economic security through a local currency that does not depend on other countries.”
According to Nikkei Asia, the Bakong and DLak would help maintain the stability of their respective countries’ currencies when trading with China, which has introduced a digital yuan. Soramitsu stated that it is also conducting investigations into potential CBDCs in Fiji, Vietnam, and the Philippines.
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