Soramitsu and Bank of Lao PDR Sign MOU for Central Bank Digital Currency Pilot Project

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Japanese company Soramitsu has signed a deal with the Payment Systems Department of the Bank of the Lao People's Democratic Republic to launch a pilot project for a digital version of the Laotian currency, the Lao kip, named the DLak. This launch is set to occur on February 7th.

As described in a video, the central bank will issue DLak in exchange for fiat currency, which can then be obtained by individuals through commercial banks. To make purchases, the user would use a QR code and an app provided by the participating sellers.

With the DLak system, transactions made using the digital currency will be instantly converted to physical currency by a commercial bank, allowing sellers to receive payment in real-time, compared to the previous process, which took up to a month.

One of the stated goals of the DLak project is to increase financial access for people who don't have bank accounts. The system doesn't require users to have a bank account to make transactions. According to Nikkei Asia, approximately 70 percent of Laotians do not have bank accounts.

The DLak project was inspired by the Bakong system in Cambodia, which was introduced in 2020 in partnership with Soramitsu. The Bakong system quickly gained 200,000 users within a few months and started exploring cross-border transactions in 2021, although it was not referred to as a central bank digital currency (CBDC).

Improving the process of sending money from other countries is also one of the goals of DLak. The use of CBDC aims to enhance payment systems and ensure financial stability through a locally-based currency that does not rely on other nations. 

The Bakong and DLak systems aim to maintain the stability of their respective countries' currencies when conducting trade with China, which has introduced a digital yuan. 

Soramitsu also mentioned that they are conducting research on CBDC in Fiji, Vietnam, and the Philippines.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash