Money is a public good, an essential tool for humanity, and keeping up to date with its technological developments is a matter of concern for big and small countries alike.
The small nation of Solomon Islands, spread across nearly 1,000 islands in the Asia Pacific region, recently joined the Central Bank Digital Currency (CBDC) research club with the help of the Japanese Government and technology company Soramitsu. The Japanese Ministry of Economic Trade and Industry (METI) has earmarked funding for the project as part of Japan's broader assistance program in the Indo-Pacific region.
The Central Bank of Solomon Islands (CBSI) together with Soramitsu will research whether the concept of CBDC could be realized in the island state and across broader Pacific island states territory, including Tongo, Fiji and Vanuatu. The proof-of-concept project will include an analysis of the potential risks and benefits of introducing CBDC as well as the practical tests of its use via mobile devices in a local commercial setup.
Soramitsu, which was chosen to implement the project, has experience developing similar systems in Cambodia (Bakong project) as well as leading CBDC proof-of-concept projects in multiple countries across Asia. The company has recently announced its plans to combine its projects into a common pan-Asian transfer and payment network. The company is also a technical contributor to the Sora blockchain-based network and economic system.
Digital currency (CBDC) is specifically advocated for countries with underdeveloped infrastructure and financial institutions as a measure for increasing financial inclusion and transparency. The island states, in addition to problems common to developing countries, have additional logistical burdens due to transportation and communication peculiarities.
In the case of successful tests, the project may evolve into an actual implementation of CBDC in the country. Unlike developed countries, where banks and payment institutions are concerned with competition from the novel product, Solomon Islands can leap forward in the digital currency field. We are set to Observe it.