Palau Introduces Blockchain-Based Savings Bonds Prototype System, Targets 2025 Launch

According to Cointelegraph, the government of Palau has introduced Palau Invest, a blockchain-based savings bonds prototype system.

The government of Palau has introduced Palau Invest, a blockchain-based savings bonds prototype system, Cointelegraph reported. Following the completion of the prototype, a public demonstration system has also been initiated.

The project is supported by Japan’s Ministry of Economy, Trade and Industry and the Soramitsu blockchain. The initiative aims to fund the country’s infrastructure projects through the blockchain-based savings bonds.

The Finance Ministry is now finalizing bond issuance criteria and obtaining government approval. Around 18,000 Palau citizens will be able to purchase the bonds via an app on their phones.

At the launch ceremony, President of Palau Surangel Whipps Jr. stated that the savings bonds initiative will enable the funding of key projects such as housing, SME development, roads and other essential services with domestically sourced capital. These projects are critical to infrastructure and generate spillover effects.

The bond project was first announced in July, aiming for a full launch in 2025. Palau, which comprises 340 islands in the South Pacific, uses the United States dollar as its currency and did not previously have a bond platform.

The Palau bond will run 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, continuing to provide technical and business support for the blockchain. The decentralized exchange Polkaswap operates on the Sora blockchain.

Soramitsu is also involved 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 modeled on the Bakong.

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

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