The government of Palau has launched Palau Invest, a “blockchain-based savings bonds prototype system.” Because the prototype is complete, a public demonstration system has also been initiated.

Japan’s Ministry of Economy, Trade and Industry and blockchain developer Soramitsu are supporting the project, which is intended to provide funds for the country’s infrastructure projects.

Bond issuance with a mission

The Palau Finance Ministry has to finalize bond issuance criteria and receive government approval. The 18,000 Palau citizens will be able to buy the bonds from the ministry using an app on their phones. Palau President Surangel Whipps Jr. said at the launch ceremony:

“The savings bonds initiative enables us to fund key projects — such as housing, SME development, roads, and other essential services — with capital sourced domestically. These projects are not just critical to infrastructure, but they also generate spillover effects.”

When the bond project was announced in July, organizers aimed for a full launch in 2025. Palau, which consists of 340 islands in the South Pacific, uses the United States dollar as its currency and had no previous bond platform.

Synergy in Southeast Asia and the South Pacific

The Palau bond will operate on the public, permissioned Hyperledger Iroha 2 blockchain on the Sora v3 Hub Chain platform. Soramitsu developed Iroha and contributed it to the Linux Foundation Hyperledger Project. It still provides technical and business support for the blockchain.

The Polkaswap decentralized exchange operates on the Sora blockchain.

Soramitsu also has a hand in Cambodia’s bakong currency , Laos’s DLak central bank digital currency (CBDC) proof-of-concept and the Solomon  Islands’ Bokolo Cash CBDC proof-of-concept. The DLak was modelled on the bakong.

Palau has had a joint project with Ripple to launch a US dollar-pegged stablecoin since 2021. After the project’s first phase was declared a success at the end of 2022, it progressed to its second phase a year later.

Palau and Cryptic Labs developed the Root Name System (RNS) early in 2022, which is the basis for the country’s digital residency program. The RNS provides a blockchain-based ID with Know Your Customer verification as a non-fungible token. That program launched on the BNB Chain in June 2022.

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