MOIT VIETNAM | Advancements in Research and Development of the Lao Cryptocurrency Market
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Advancements in Research and Development of the Lao Cryptocurrency Market
Considering that only 30% of the population in Laos has access to a bank account, the nation has today launched a trial of digital money for cross-border payments.
On February 6, 2023, a memorandum of understanding was signed between the Central Bank of Lao PDR and Japanese blockchain company Soramitsu marking the digital currency being put into testing. Soramitsu Company, headquartered in Tokyo, Japan, also built a digital currency called Bakong for Cambodia in October 2020.
Laos's digital currency was created by Soramitsu company using a variation of the system in Cambodia. Commercial banks will distribute this currency to Lao people. From there, consumers in this country can use it when making purchases at stores.
Some other national central banks have also launched digital currencies such as Cambodia's Bakong or Nigeria's eNaira, but transactions using these cryptocurrencies are not yet popular. Laos and Cambodia plan to build a cross-border payment system to lay the foundation for the development of central bank digital currencies (CBDC).
The Lao government believes that financial services will be more accessible thanks to CBDC. In fact, only 30% of the Lao population uses a bank account. Cryptocurrency will allow people to easily pay at stores or transfer money via QR codes using only their smartphones, even if they do not have a bank account. The cost of remittances from foreign workers is also significantly reduced thanks to this digital currency.
In the context that Laos and Cambodia's trade with China tends to expand in the future, a stable exchange rate with the Yuan is also a top priority for the two countries. Besides, the People's Bank of China has also issued a trial of the digital Yuan. By introducing cryptocurrency before China uses it to make cross-border payments, the two countries Laos and Cambodia probably want to increase the benefits of local currencies.
In Southeast Asia, the Philippines is also a country said to be conducting research on CBDC. Besides, Fiji and other Pacific island countries have also shown interest in this digital currency concept.
Soramitsu Company, Japan aims to create a system with an international payment network linking the digital currencies of these countries. The reason for efficiency in cross-border transactions and payments is the reason why countries research and test CBDC.
Thus, with 70% of the population not using bank accounts, the Lao Central Bank's testing of electronic money is a necessary step, a premise for the development of a cross-border payment system in the future. future.
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