Southeast Asian country, Laos, is the latest country to join the CBDC bandwagon. The Laotian government has signed a deal with Japanese blockchain company, Soramitsu, that will see it research and develop a framework for its central bank digital currency (CBDC). According to reports, authorities are brooding on the implications of CBDC for the country.
An October 3 report issued by Asian-focused media outfit Nikkei Asia shared details on the form Laos’ CBDC project will take. The report revealed that the project will begin this month following the signing of an MOU between the apex bank in Laos and the Japan International Cooperation Agency to undertake a study on the development of the CBDC.
Laos Considers Transborder Settlements With China Using CBDC
The research will examine the activities of banks and other financial institutions within the country’s banking infrastructure. According to Nikkei Asia’s report, the research will equally examine the transactional needs of Laotians on a larger scale. Beyond this, Laos authorities have said that a CBDC will provide lawmakers with viable data on the country’s while helping it achieve a transborder CBDC-focused settlements relationship with Asian giant China, which is also its (Laos) largest trading partner after the US.
Meanwhile, Soramitsu, the Japanese blockchain, has once worked with its Asian counterpart Cambodia on its Bankog CBDC payments infrastructure which runs on blockchain technology. Cambodia created the payments system to reduce its dependence on the US dollar, especially for local trade. Following its launch in late 2020, Cambodia’s Bankog app has witnessed multiple downloads and is currently being used in more than 2000 stores in the country.
Laotian Authorities Approve Mining and Trading Initiative
The latest move by authorities in Laos to assess both the potentials and risks of a CBDC aligns with its decision to embrace digital currencies while moderately regulating them. Earlier last month, the Laotian government passed a mining and trading project seeking to take advantage of China’s slack on crypto mining and trading after it banned both activities. As such, six countries have been licensed to participate in the mining project where they would be able to mine cryptocurrency of their choice.
The Laotian ministry of technology and communications and other government agencies have been working towards developing regulations for the adoption and usage of cryptocurrencies. While this is going on, Laos central bank has sternly warned investors against the risks inherent in cryptocurrencies.
The CBDC fever is spreading far and wide, and Laos is the latest to pick up the gauntlet. Seeing the huge potentials of digital currencies when compared to fiat currencies, most governments around the world are now adopting a favorable approach to the former and even deliberating on a CBDC. China seems to be the only one that has considerable progress on its Digital Yuan or e-CNY.