The central bank of Laos is working with Japanese financial startup Soramitsu to conduct a study on the feasibility of a central bank digital currency (CBDC).
The country of Laos is the next nation to consider a central bank digital currency, according to a report from Nikkei Asia. The Southeast Asian nation has struck a deal with Japanese startup Soramitsu, which had previously worked on a similar initiative with Cambodia. The latter has already released a CBDC, one that was ranked next to Bahamas’ Sand Dollar in a PwC report on the top CBDCs.
The central bank of Laos and Soramitsu os studying the feasibility of a CBDC in the country. The initial study will launch by the end of the month, as the nation bids to digitize its economy. Nikkei says that the Bank of the Lao People’s Democratic Republic has signed a memorandum of understanding with the Japan International Cooperation Agency on studying the development of a CBDC.
Like other bigger nations working on a CBDC, the expectation is that a national digital currency would help in understanding how the economy is working, offering valuable data. Additionally, it will boost financial inclusion, a key motivator for many countries. Soramitsu will lead the study to see how banks and intermediaries can be involved.
The news of yet another country deliberating a CBDC is nothing new for the market, which has seen a surge in CBDC interest in recent times. With the crypto market now more or less an accepted asset class, banks would like to leverage the technology for their currencies. The benefits are clear, and they cannot afford to be left behind and usurped.
CBDC a huge focus for banks
CBDCs were initially dismissed by many nations, with few, notably China, seeing potential in them. To some degree, central banks and governments are implementing digital currencies to combat the ever-growing presence of cryptocurrencies. Again, China is a prime example of this, completely banning cryptocurrencies and pushing for rapid, wide-scale adoption of its digital yuan.
Stablecoins, in particular, have been a pain point for authorities, with countries like the United States keen on regulating them to maintain the sovereignty of the U.S. dollar. Developing nations tend to follow suit, taking after how the major economies handle the asset class.
These factors have led to an accelerated focus on developing CBDCs, and the number of nations doing so has increased markedly in the past year. Russia, India, and Sweden are only a few countries from this long list. Unlike China, however, these countries are not keen on banning cryptocurrencies entirely. India, for example, is considering categorizing cryptocurrencies as a commodity.
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