Cambodia’s CBDC developer to construct bond market for Palau on blockchain: report

A Japanese fintech developer will create a blockchain-based bond market gateway for Palau, aiming to launch a trial in 2024 and go full-fledged the following year.

Japanese fintech developer Soramitsu, best known for developing a central bank digital currency (CBDC) for Cambodia, is preparing to build a blockchain-based bond market gateway for the Pacific island nation of Palau, Nikkei has learned.

The report notes that Soramitsu secured the contract and plans to introduce the market on a trial basis in fiscal 2024, with a full rollout expected the following year. This will allow the Palau government to issue bonds to individual investors and effectively manage principal and interest payments.

Sources familiar with the matter say the total project cost is estimated at several hundred million yen ($1.2 million to $5.6 million), less than half the cost of a non-blockchain alternative. The project reportedly has backing from Japan’s Ministry of Economy, Trade and Industry, with Japan’s foreign and finance ministries providing strategic and project management advice.

Soramitsu’s successful development of Cambodia’s CBDC in 2020 has bolstered its reputation as the digital currency’s popularity has soared, with over 10 million accounts opened by December 2023, accounting for 60% of Cambodia’s population. Later, Cambodia’s central bank governor Chea Serey outlined plans to expand the reach of its CBDC internationally, particularly through a collaboration with China’s card payment service UnionPay International and other global partners.

While Soramitsu’s work in Cambodia was well-received, the long-term popularity of CBDCs remains to be seen. In late June, crypto.news reported a sharp decline in activity for India’s digital currency, the e-rupee, after local banks stopped artificially inflating its metrics.

The Reserve Bank of India managed to reach 1 million retail transactions last December by artificially infiltrating local banks’ metrics, offering incentives to retail users and paying part of bank employees’ salaries using digital money, according to people familiar with the matter.