Laos is the latest country to begin research on central bank digital currencies (CBDCs). It is announcing an upcoming study in partnership with distributed ledger technology company (CBDC) DLT of Japan Soramitsu.
According to a report by Nikkei Asia dated October 3, the project is slated to begin this month. After the signing of a Memorandum of Understanding between the Central Bank of Laos and Japan, the International Cooperation Agency to study the development of CBDCs.
The study will assess the performance of banks and other financial intermediaries in the financial system and the more comprehensive transactional needs of the Lao public.
According to the report, a CBDC would provide Lao politicians with better economic data and pave the way for CBDC-based cross-border settlements with the neighboring country and key trading partners.
Soramitsu worked with Cambodia to develop the Bakong digital payments system, a DLT-based payments network designed to reduce the country’s dependence on US dollars for domestic trade.
The Bakong app has been downloaded around 200,000 times since its launch in October 2020 and is currently supported by about 2,000 stores.
The Laos government’s move to study CBDC appears to be part of a push to explore more specific digital asset regulations.
On September 11, authorities officially approved a pilot public-private research into cryptocurrency mining and trading to capitalize on China’s recent crackdown on the mining sector. The result was the brain drain on an industrial scale.
Six companies, including banks and construction companies, are licensed to mine crypto assets as part of the project.
Related: Cryptocurrency trading increased 706% in Asia as institutional adoption increases – Chainalysis
Several government ministries, led by the Ministry of Technology and Communications in collaboration with the Bank of Laos and the national electricity company Electricite du Laos, have also begun drafting regulations on digital assets in the country.
However, the country’s central bank has issued a notice warning the public of the risks associated with unregulated crypto assets like Bitcoin and Ethereum.