The Laotian central bank and the Soramitsu firm signed an MOU to launch the project to expand financial inclusivity and provide sellers with faster settlement.
Japanese financial software firm Soramitsu has announced the signing of a memorandum of understanding with the Bank of the Lao People’s Democratic Republic Payment Systems Department on the launch of a proof-of-concept project for a Laotian central bank digital currency (CBDC). Under the agreement, a digital form of the Lao kip, called the DLak, would launch Feb. 7.
According to an explanatory video, the central bank would provide DLak to commercial banks in exchange for fiat currency, and the user would exchange fiat for DLak from the commercial bank. The user would then make purchases from participating sellers using a QR code and an app.
The DLak would be instantly converted to fiat by a commercial bank, making it possible for sellers to receive payment in real time. Previously, a digital transaction in Laos took up to a month to clear.
BREAKING: The Bank of the #Lao PDR Payment Systems Department and #SORAMITSU Co., Ltd have signed an MOU for a #CBDC Proof of Concept ⛩ #DLak #LaoPDR pic.twitter.com/12S74IIvm4
— ソラミツ SORAMITSU | 7 YEARS 2016-2023 (@soramitsu_co) February 6, 2023
Apparently, a user would not be required to have a bank account to transact with DLak. Financial inclusion for people without bank accounts is one of the stated objected of the project. According to Nikkei Asia, around 70% of Laotians do not have bank accounts.
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The DLak project was modelled on the Cambodian Bakong system that was launched in collaboration with Soramitsu in 2020. That system was not described as a CBDC. The Bakong system garnered 200,000 users within months and began experiments with cross-border transactions in 2021.
Simplifying remittances from abroad is also a goal of the DLak. In addition:
“CBDC is a way to advance the sophistication of payment systems, as well as ensuring economic security through a local currency that does not depend on other countries.”
According to Nikkei Asia, the Bakong and DLak would help maintain the stability of their respective countries’ currencies while trading with China, which has introduced a digital yuan. Soramitsu stated that it is also conducting CBDC research in Fiji, Vietnam and the Philippines.