Laos has become the latest country to announce research on a central bank digital currency (CBDC), announcing a collaboration with Soramitsu, a Japanese distributed ledger technology (DLT) firm.
The project is set to start this month, according to a Sunday article from Nikkei Asia, and follows the signing of a memorandum of understanding between Laos’ central bank and the Japan International Cooperation Agency to research CBDC development.
The study will examine the functioning of banks and other financial intermediaries within the financial system, as well as the Laotian public’s larger transactional demands.
According to the paper, a CBDC would provide better economic data to Lao policymakers and might open the way for CBDC-based cross-border settlements with its neighbour and second-largest trading partner, China.
Soramitsu collaborated with Cambodia to create the Bakong digital payment system, a distributed ledger technology-based payments network aimed at reducing the country’s dependency on US dollars for domestic trade.
Since its inception in October 2020, the Bakong app has been downloaded over 200,000 times and is now supported by over 2,000 retailers.
The decision by the Laos government to investigate a CBDC appears to have coincided with a push to investigate more lax digital asset legislation.
On Sept. 11, the administration approved a public-private pilot project to investigate cryptocurrency mining and trading in order to take advantage of China’s recent crackdown on the mining industry and the ensuing migration of industrial-scale miners.
As part of the scheme, six entities, including banks and construction firms, have been granted licenses to generate crypto assets.
Several government agencies, led by the Ministry of Technology and Communications, have begun formulating legislation controlling the usage of digital assets in Laos in collaboration with the Bank of Laos and the national power utility Electricite du Laos.
The country’s central bank, on the other hand, issued a warning to the public about the dangers of uncontrolled crypto assets like Bitcoin (BTC) and Ether (ETH) (ETH).