At the ceremony that took place on the 6th of February, The Bank of the Lao PDR and SORAMITSU signed an MOU marking the commencement of the PoC, speeches were delivered by representatives of the Bank of the Lao PDR, the Embassy of Japan in the Lao PDR, the Ministry of Economy, Trade and Industry, JICA, and SORAMITSU. A CBDC demonstration was also performed in this ceremony.

From the 7th of February, officials from the Bank of the Lao PDR, the Embassy of Japan in the Lao PDR, and JICA will all contribute to the CBDC PoC in Laos. For this PoC, SORAMITSU has provided Lao PDR with a modified system based on the proven “Bakong” system, which has been operating smoothly for two years since its official launch in Cambodia, in October 2020.

As for the operational flow of the CBDC PoC, the Bank of the Lao PDR will generate CBDC, then issue it to a temporary commercial bank. The temporary commercial bank will then send CBDC to an individual, allowing said individual to pay at the store. Then, the store sends CBDC to a commercial bank. Finally, the Bank of the Lao PDR will collect CBDC from the commercial bank, as shown in the figure below.

1) Financial inclusion to the broader population, in order to provide digital financial services to people who do not have access to bank accounts;

2) Cross-border remittances, to reduce remittance times and costs from migrant destinations such as neighboring countries;

3) 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.