The Bank of Lao PDR has implemented tight monetary policy wisely in order to increase
money supply in line with the pace of economic situation and that does not affect inflation, while
ensuring the stability of kip value. The Bank of Lao PDR continues to use exchange rate as the main
tool to maintain the stability of the national currency, adopting exchange policy that is based on state
managed market mechanism by determining exchange rate reference of Kip to US dollars daily to
provide the reference for commercial banks in determining the exchange rates within the defined
areas. Foreign currency market was adjusted when necessary to ensure sufficient supply of foreign
currencies to meet the demand. Quality of credits has been controlled to ensure that NPL is less than
3%. The Bank of Lao PDR has also reduced and suspended its credits to infrastructure construction
projects and long-term projects with late income yielding. There have been increased dissemination of
foreign currency management policy and promotion of the use of Kip through various means as well
as developing and improving various rules and regulations such as: issue rules and regulations on
request for transferring money to outside of the country by commercial banks, improve rules and regulations governing foreign exchange agents, promote the use of Kips by increasing monitoring
transactions of enterprises and private foreign exchange agents; ensure price tags of goods and
services and domestic settlements must be in Kip; improve quality and component of the bank note,
introducing new 2,000 kip notes and 100,000 kip notes into circulation in 2012;promote of transaction
settlement through banking system and increase number of foreign exchange agents.