24-8-2024 (HANOI) In a significant move to strengthen economic ties and mitigate external risks, the State Bank of Vietnam and the Bank of Laos have joined forces to explore the implementation of a cross-border retail payment system. This initiative aims to promote the use of domestic currencies in bilateral trade and investment activities between the two neighbouring Southeast Asian nations.
The central banks of both countries recently convened a conference to share experiences and strategies for encouraging the use of their respective national currencies in cross-border transactions. This collaborative effort reflects a growing trend among ASEAN nations to reduce dependence on foreign currencies and shield their economies from global financial volatilities.
Vietnam, as Laos’ third-largest trading partner, enjoys a longstanding trade and investment relationship with its landlocked neighbour. This established economic partnership provides a solid foundation for the proposed currency cooperation scheme.
The envisioned cross-border payment system will be jointly managed by the Vietnam National Payment Corporation and the Lao National Payment Network Co. Ltd. This collaborative oversight aims to ensure smooth operations and maintain financial security for both nations.
A key feature of the proposed system is the Vietnam-Laos cross-border retail payment connection project, which will utilise QR code technology. While still in its preparatory stages, the first phase of this innovative payment solution is slated for launch in September. The project has already garnered significant interest from financial institutions in both countries, with nine Vietnamese banks and thirteen Lao banks currently engaged in the initiative.
This move towards increased use of domestic currencies in regional trade aligns with a broader trend observed across ASEAN member states. Countries in the region are increasingly adopting similar strategies to insulate their economies from potential disruptions stemming from global political, geopolitical, economic, and financial shifts.
The collaboration between Vietnam and Laos in this financial technology venture represents a forward-thinking approach to regional economic integration. By leveraging digital payment solutions, the two nations aim to streamline cross-border transactions, reduce currency exchange risks, and foster closer economic ties.
As the project progresses, it will be closely watched by other ASEAN members and economic observers. The success of this initiative could potentially serve as a model for similar collaborations within the region, further strengthening ASEAN’s economic resilience and reducing its collective vulnerability to external financial shocks.
