LAOS is now looking at the possibility of having its own digital currency, following its recent move to allow six companies to mine and trade Bitcoins in the country.
Its central bank, Bank of the Lao People's Democratic Republic, recently signed a Memorandum of Understanding with the Japan International Cooperation Agency on the possibility of developing a digital version of the Laos currency kip.
It is also working with Tokyo-based fintech company Soramitsu, which has been dealing with Cambodia on its digital currency.
The company is expected to begin its work as early as this month.
Soramitsu has been working with the National Bank of Cambodia to develop the digital payment platform Bakong.
A Nikkei Asia report said this marks an attempt by Laos to extend the reach of its currency as a digital Chinese yuan looms as a potentially powerful presence in the country.
It said a digital version of the kip would also make policymakers better able to gather data needed to take the pulse of the economy, such as the amount of money in circulation.
Under the MoU, Soramitsu is expected to assess the role of banks and other intermediaries and the country's needs for financial inclusiveness, among other areas.
If Laos decides to issue a digital currency, Soramitsu may even play a role in its development.
According to World Bank data, China is landlocked Laos' second largest trading partner after Thailand.
In 2019, China's exports to Laos was about US$1.87 billion, while Lao's exports totalled around US$1.88 billion.
In Cambodia, the Bakong app has had 200,000 downloads since its debut in October last year and it can now be used at about 2,000 stores in the country.
Soramitsu said more than 1.4 million transactions worth an equivalent of US$500 million have been recorded in the first six months of the year.
In a similar development, Bhutan said last month that it was partnering with United States based blockchain player Ripple on a pilot digital currency project.
These moves come as China prepares to launch a digital version of its currency as early as next year.
While the digital yuan is likely to be a force only within China's borders in the early stages, the currency is expected to move beyond its shores later.
According to Nikkei, China's central bank - the People's Bank of China - has already said it will consider testing cross-border digital yuan payments.
The US dollar has long been the main currency used in many Asian emerging market economies.
However since the global financial crisis, Asian nations with high levels of trade with China have become more concerned with their currencies' stability in yuan terms.
Central bank-issued digital currencies are seen by some as a way to curb excessive yuan inflows.