The nation of Palau has contracted with DLT firm Soramitsu Labs to build a government bond issuance platform, the Nikkei reported. The Pacific island nation has a population of less than 20,000 who it is targeting as investors.
Soramitsu is best known as the developer of Cambodia’s Bakong, the national payment system that leverages DLT. Most of Soramitsu’s government work has targeted payments and central bank digital currencies (CBDCs), including work in Laos, the Philippines and Vietnam. However, it also worked with the Asian Development Bank on a proof of concept for the cross border settlement of bond transactions.
The Nikkei reported that Soramitsu was very competitive on price with the project costing ‘several hundred million yen’. Each hundred million yen is equivalent to $630,000. Additionally, the project will receive aid from Japan’s Ministry of Economy, Trade and Industry. We believe some of the Soramitsu CBDC projects likewise received aid.
Several governments have already used blockchain for government bond issuance. Some of them are for institutional transactions, such as Hong Kong’s large green bond issuance of more than $750 million. Like Palau’s planned issuance, others have targeted individual investors. Examples include the Philippines and Thailand.
Palau plans to start testing the system later this year, aiming to issue its first bond next year.
