Shibuya-ku, Tokyo, Japan
Monday , Jan 10, 2022

SORAMITSU to Lead Feasibility Study on Digital Currency in Oceania

The study, based on the policy goals of the Cabinet Secretariat of Japan, will analyse financial infrastructures and the future of digital assets in four Pacific Island countries.

SORAMITSU Co., Ltd. (President: Kazumasa Miyazawa; Headquarters: Shibuya-ku, Tokyo; hereinafter referred to as SORAMITSU) has been entrusted by the NTT Data Institute of Management Consulting, Inc., to conduct a feasibility study on digital currencies in Oceania. This project highlights Japan's cooperative capabilities in the field of financial infrastructure, as outlined in the "Joint Action Plan for Pacific Bonds [kizuna] and fo/r Mutual Prosperity" presented at the Ninth Pacific Islands Leaders Meeting (PALM9) in July, 2021.
The purpose of this groundbreaking study is to chart a path for the Pacific Island countries into the age of digital finance. It will systematically investigate financial infrastructures in four countries: Fiji, Solomon Islands, Tonga, and Vanuatu. In addition to assessing current procedures for wholesale settlements (i.e., between financial institutions) and cash-based and cashless retail settlements (e.g., between end users), SORAMITSU will evaluate the potential risks and benefits of introducing central bank digital currencies (CBDCs) and other novel digital assets.
A robust foundation of digital currency expertise

Over the past several years, SORAMITSU has established itself as a leader in the digital currency space. In cooperation with the National Bank of Cambodia, SORAMITSU designed and built Bakong, a blockchain-based digital currency and payments infrastructure that enables instant wholesale and retail transactions. Piloted in 2019, and officially launched in 2020, Bakong was the first system of its kind to be brought live. As of November 2021, payment rails linked by Bakong were in use by nearly 8 million Cambodians, and over 270,000 previously unbanked or underbanked users had created Bakong wallets directly via a mobile app designed by SORAMITSU and the NBC.

Bakong aids financial inclusion by enabling anyone with a Cambodian phone number to make instant, secure payments and remittances at no cost. Recently, the National Bank of Cambodia and Maybank have demonstrated the cross-border utility of digital currencies by making Bakong available to Cambodian workers in Malaysia, at a fraction of the cost of traditional remittances. A similar service may soon become available in Thailand.

Since its launch, Bakong has been recognised with a number of awards: a 2020 FinTech & RegTech Global Award and a 2021 Japan Financial Innovation Award for SORAMITSU, as well as a 2021 Nikkei Superior Products and Services Award for the system itself.

Based on this experience, SORAMITSU was recently selected by the Japan International Cooperation Agency (Chairman: Shinichi Kitaoka; hereinafter referred to as JICA) to conduct a feasibility study on central bank digital currency in Laos. In close cooperation with JICA and the Bank of the Lao P.D.R., SORAMITSU will assess financial infrastructure in Laos and the potential of digital currency (CBDC) from the perspectives of inclusion, efficiency, security, and resilience. SORAMITSU will furthermore investigate the suitability of various CBDC models and implementations, drawing on lessons learned in Cambodia, as well as experience gained as a finalist in the Monetary Authority of Singapore's recent Global CBDC Challenge.
Financial system research and innovation as a bridge between Japan and Oceania

Like the JICA-led project in Laos, the forthcoming feasibility study in Oceania represents Japan's commitment to public-private cooperation in the Pacific region. It is grounded on the "Joint Action Plan for Pacific Bonds [kizuna] and for Mutual Prosperity," an ambitious agenda for strengthening the bonds – in Japanese, kizuna (絆) – between Japan and its regional partners.

The study, which is expected to focus on Fiji, Tonga, Solomon Islands, and Vanuatu, will address the fourth item in the Joint Action Plan: "Strengthening the Foundation for Sustainable and Resilient Economic Development." In all four countries, SORAMITSU will investigate the current status of financial infrastructures, payment procedures between financial institutions, the market penetration of cashless payments, and the networks of actors (such as commercial banks and non-bank payment service providers) currently providing services, among other topics. Local conditions in each country will be comprehensively analysed, and regional-level conclusions will be drawn.

In addition to determining baseline conditions, the study will evaluate the possibility of introducing central bank digital currencies, cryptocurrencies, and/or central bank-operated payment infrastructures – a question to which SORAMITSU's concrete experience in Cambodia, concurrent research in Laos, and contributions to the SORA decentralized economic system will contribute invaluable insight.

"Advances in information technology can create new economic opportunities for Fiji, Tonga, the Solomon Islands, and Vanuatu. We hope that by studying their existing payment systems, we can present specific proposals that will enable economic growth and further innovation in these countries," said Makoto Takemiya, the CEO of SORAMITSU Holdings and SORAMITSU co-founder.
About SORAMITSU Co., Ltd.

SORAMITSU is a Japanese fintech company with expertise in developing blockchain-based solutions for digital asset and identity management. Our mission is to use blockchain to promote innovation to solve pressing societal challenges.

SORAMITSU is the developer of and major contributor to the open-source blockchain platform Hyperledger Iroha, which is tailored for enterprise and public-sector use. Part of the Linux Foundation's Hyperledger Project, the Iroha blockchain's flexible permissions system and scalable, performant architecture suit it to digital asset and identity management in high-traffic, multi-stakeholder environments.

Utilizing blockchain, SORAMITSU has developed a digital currency for the National Bank of Cambodia, a securities custody transfer system prototype for the Moscow Stock Exchange Group, a closed-loop payment system for the University of Aizu in Japan, and an identity verification system prototype for Bank Central Asia in Indonesia. We have also conducted proof-of-concept tests for several major Japanese enterprises, and are active contributors to open source projects, such as the SORA cryptoeconomic system, the Polkaswap DEX, and the DeFi wallet, Fearless Wallet.

Based on these experiences, SORAMITSU aims to deploy cutting-edge technology on a global level in order to expedite financial inclusion and health, mitigate economic inefficiencies, and contribute to economic growth and development