Nabilah S
Palau, a Pacific island nation, has enlisted the Japanese financial software company Soramitsu to develop a platform for issuing and managing government bonds. This initiative, part of Palau’s ongoing investment in blockchain projects, is set to begin trials within the current fiscal year, with a potential live rollout next year.
The contract, finalized in June as reported by the Nikkei, is valued at “several hundred million yen.” Given that 100 million yen is approximately $630,000, the overall cost is notably less than half the expense of implementing such a system using traditional technology. The project will also benefit from the support of Japan’s Economy, Trade and Industry Ministry, along with strategic and management guidance from the foreign and finance ministries.
Palau, which uses the US dollar as its currency, currently lacks a bond platform. The majority of its approximately 18,000 citizens, scattered across 340 Pacific islands, utilize the services of US banks, according to The Nikkei. The new platform aims to enable the government to access citizens’ savings.
In a strategic move, Palau has partnered with Ripple Labs to develop a US dollar-pegged stablecoin on Ripple’s XRP Ledger central bank digital currency (CBDC) platform. This project, which launched in 2021, advanced to the second phase of its launch program at the end of 2023.
In January 2022, Palau introduced a digital residency program featuring the privacy-protecting Root Name System, in collaboration with Cryptic Labs. This system issues blockchain-based IDs as non-fungible tokens, incorporating Know Your Customer (KYC) verification. The program became operational on the BNB chain in June 2022.
Soramitsu played a key role in launching a Central Bank Digital Currency (CBDC) proof-of-concept project in the Solomon Islands in November. The company had previously been crucial to the launch of Cambodia’s CBDC-like Bakong digital currency in 2020.
The Bakong served as a model for the proof-of-concept of Laos’s DLak, which was initiated in February 2023 following a Memorandum of Understanding between Soramitsu and the Bank of the Lao People’s Democratic Republic.
In August, Soramitsu announced its plans to develop an Asian cross-border payment system utilizing the Bakong and stablecoin. Additionally, the company expressed its intention to establish a stablecoin exchange in Japan.
