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

Soramitsu has secured the contract and plans to introduce the marketplace on a trial basis in fiscal 2024, with a full rollout expected the following year, enabling the Palauan government to issue bonds to individual investors and manage principal and interest payments efficiently, as per the report.

The total project cost is estimated at several hundred million yen (between $1.2 million to $5.6 million), less than half the expense of a non-blockchain alternative, sources familiar with the matter say. The project has reportedly gained support 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 surged, with over 10 million accounts opened by December 2023, accounting for 60% of Cambodia's population. Later on, Cambodia's central bank governor Chea Serey indicated plans to expand its CBDC's outreach internationally, particularly through a collaboration with UnionPay International, China's card payment service, and other global partners.

While Soramitsu's work in Cambodia has been 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 ceased artificially inflating its metrics.

According to sources familiar with the matter, the Reserve Bank of India succeeded in achieving a milestone of 1 million retail transactions last December only after metrics were artificially infiltrated by local banks which offered incentives to retail users and the disbursement of a portion of bank employees' salaries using the digital currency.