The Central Bank of Laos has launched testing of the central bank’s digital currency (CBDC), known as DLak or digital Lao kip.
The testing process is carried out to study the prospects for the issuance and subsequent use of digital currency in the country. During this pilot project, the Central Bank of Laos will issue a CBDC to a temporary commercial bank, which will distribute it to individual users for testing as a payment method at retail outlets participating in the trial launch of a new generation currency.
The testing was launched after a feasibility study of the feasibility of the initiative, which took a year to compile. As part of the pilot project, a modified version of the blockchain-based CBDC system, officially launched in Cambodia in October 2020, will be tested. This system will provide users with the opportunity to make bank transfers, P2P payments, and point-of-sale payments using the digital currency of the country Bakong.
Soramitsu, a Japanese provider of decentralized technologies who developed the proof of concept CBDC together with the Central Bank of Laos, said that the test results will be used to adjust the requirements of CBDC. The improvement of the digital currency turnover system is necessary to coordinate this process with the characteristic features of the country’s financial sector.
Also, the results of the pilot project are necessary for consideration and final decision on the use of a new generation of currency by the Central Bank of Laos.
Soramitsu reports that the Lao regulator is exploring the possibility of introducing CBDC as a means of expanding access to financial services. This solution could provide access to digital services to those people who do not have the opportunity to visit bank branches or have difficulties with these visits. Also, the mass introduction of digital currency can simplify cross-border money transfers and ensure economic security.
As we have reported earlier, Bank of England Launches CBDC Project.