Palau has launched a prototype blockchain-based savings bond system with the support of Japan and Soramitsu, aiming to raise capital for national infrastructure projects.
On October 7, the Palau government announced the completion of a prototype and the public launch of a blockchain-based savings bond system called Palau Invest. The project, supported by Japan’s Ministry of Economy, Trade and Industry (METI) and blockchain technology company Soramitsu, aims to provide funding for the island nation’s critical infrastructure development projects.
The Palau Ministry of Finance plans to finalize the bond issuance criteria and submit them to the government for approval. About 18,000 Palauans will be able to purchase the bonds via a mobile app. “The savings bond initiative allows us to raise funds for important projects – such as housing, small and medium-sized enterprises, roads, and other essential services – from domestic resources,” said Palau President Surangel Whipps Jr. at the launch. “These projects are not only critical infrastructure projects but also have positive ripple effects throughout the economy.”
Palau Savings Bond Infrastructure Diagram. Source: Soramitsu
The bond project was first announced in July 2023 with an expected official launch in 2025. Palau, an archipelago of 340 islands in the South Pacific, uses the US dollar as its currency and has never had a bond platform before.
Blockchain Technology Promotes Transparency and Efficiency
The Palau bond will operate on the Hyperledger Iroha 2 public permissioned blockchain, built on the Sora v3 Hub Chain. Soramitsu, the company that developed Iroha and contributed to the Linux Foundation's Hyperledger project, will continue to provide technical and business support for the blockchain. The Polkaswap decentralized exchange also operates on the Sora blockchain.
Source: Soramitsu
This is not Soramitsu’s first involvement in national blockchain projects. The company contributed to Cambodia’s Bakong digital currency project, Laos’ DLak CBDC trial (modeled after Bakong), and Solomon Islands’ Bokolo Cash CBDC trial.
Palau has also partnered with Ripple to launch a stablecoin pegged to the US dollar starting in 2021. After a successful first phase in late 2022, the project has entered phase 2 in 2023.
Additionally, Palau and Cryptic Labs developed the Root Name System (RNS), the foundation for the country’s digital residency program in early 2022. RNS provides a blockchain-based ID with KYC verification in the form of an NFT. The program was launched on BNB Chain in June 2022.
