Southeastern Asia country launches a Proof of Concept CBDC project

The central bank of Laos has launched a CBDC project code-named “DLak” (Digital Lao Kip) in partnership with Soramitsu, a Japanese financial software firm. Bank of the Lao People’s Democratic Republic Payment Systems Department and Soramitsu reached an agreement to sign an MOU for a Proof of concept CBDC. The project will bring about the expansion of financial inclusivity providing seller s with more and faster payment routes.

The CBDC experiment was demonstrated at stores in Vientiane, the capital of Laos using a modified system provided by Soramitsu, based on the Bakong system, which has been in use in Cambodia. The Cambodian Bakong system was launched in partnership with Soramitsu in 2020.  Further research toward the official start of the CBDC operation will be dependent on the results from the demonstration according to [state who said this – the govt of Laos or?? ].

As stated in the press release, the CBDC will function with a temporary commercial bank, where the Central Bank of Laos generates the CBDC and issues it to the temporary commercial bank. Then, the commercial bank sends the CBDC to individuals who would use them as a payment medium in stores. The CBDC would flow back to the commercial bank from the stores, and then the central bank receives the CBDC from its commercial banks.

Laotian Central Bank highlighted the objectives of the implementation of CBDC to include:

• Financial inclusion through providing digital financial services to those without access to bank accounts.
• Remittance time and cost reduction.
• Improved payment and settlement systems

According to Nikkei Asia, the Bakong and DLak move would “help maintain the stability of their countries’ currencies while trading with China, which has introduced a digital yuan.” 

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