Bank of the Lao PDR (BoL) is set to tackle the difference in currency exchange rates between banks and money-changing outlets through the registration of exchange units, bringing them under the authority of commercial banks.
As the central bank, the BoL issued a notice on August 12 informing currency exchange units nationwide to register with commercial banks to ensure their operations are carried out under the authorisation of the banking system.
The notice, which was stamped and signed by BoL deputy governor Vatthana Dalaloy, stated that the registration of currency exchange units under the banking system will result in more efficient currency management, which will help to solve Laos’ economic and financial difficulties.
Proposals for the opening of currency exchange units were submitted by operators to the BoL prior to the issuance of the notice on July 18, but those still in the process of being authorised will no longer be allowed, according to the central bank’s notice.
The BoL also called on business operators involved in currency exchange to cooperate with commercial banks in signing partnership agreements.
In addition, the BoL’s Monetary Policy Department issued a notice on July 12 informing public commercial banks, joint-venture commercial banks, private commercial banks and subsidiary branches of foreign commercial banks in Laos to ensure their currency exchange units were authorised for dealings under the supervision of commercial banks.
The department called for the operators of currency exchange units to coordinate with any commercial bank and sign a contract which would permit them to operate as an authorised exchange unit of a bank under the conditions agreed to by the two parties.
After signing an agreement with any chosen commercial bank, the owners of currency exchange units are required to submit a formal report to the department or any BoL branch within 10 days of signing the agreement.
The owners of currency exchange units are also required to open a bank account with their partner bank so that the two parties can carry out currency exchanges in both cash and transfer using these accounts only.
At the same time, currency exchange units can buy and sell currencies in agreed amounts to comply with the regulations of their partner commercial bank.
Commercial banks and their authorised currency exchange units are also required to provide regular reports to the BoL on exchange rates and buy-sell activities to the department in accordance with the central bank’s regulations.
Currency exchange units must sign an authorising agreement with a commercial bank within three months after the notice was issued. If they fail to do so, their business licence will be revoked and their operations suspended, and they will be penalised if they continue to operate.
VIENTIANE TIMES/ASIA NEWS NETWORK