The case of USD access in Tonga and in Pacific trade
Solving with stablecoins
There’s a quiet financial crisis playing out across the Pacific that rarely makes headlines outside of development economics circles. It takes a very specific form. The USD is slowly, steadily becoming inaccessible in one of the most remittance-dependent regions on earth.
The problem has a name
Since 2011, the number of correspondent banking relationships in the Pacific has fallen by nearly 50%, with USD CBRs falling by more than 60%, almost twice as severe as the global average.
The mechanics are straightforward, if frustrating. Global banks face enormous compliance costs under AML/CFT frameworks. Small Pacific island economies offer low transaction volumes, fragmented regulation, and thin margins. The risk simply isn’t worth the return. So the banks leave.
The sharp decline in CBRs has left some Pacific countries teetering on the edge of financial isolation, threatening remittances, trade, aid, and disaster response.
For Tonga specifically, this is not an abstract concern. Remittances account for approximately 42% of Tonga’s GDP, the highest remittance-to-GDP ratio in the world according to the World Bank. At least 80% of those remittances are received through MTOs, and the restrictions are felt most acutely during post-disaster events, Mother’s Day, Father’s Day, and the festive season, when millions of Pa’anga flow into the country.
Two small Tongan banks have already lost their USD accounts. The institutions that remain are stretched, expensive to use, and operating under constant pressure.
The trade problem nobody talks about
Most of the discussion around Pacific de-risking focuses on remittances — diaspora workers sending money home. But there’s a parallel problem that gets far less attention. Trade finance.
Tongan importers, the people who bring in food, building materials, fuel, and consumer goods, need USD to pay their suppliers in Singapore, China, Australia, and elsewhere. Not tomorrow. Now, reliably, at a reasonable cost.
The current path looks something like this. A Tongan importer needs to pay a Singaporean exporter in USD or SGD. They go to their local bank. Their local bank is one of perhaps two or three institutions left with any USD correspondent relationship. The fees are high, the timing is unpredictable, and the relationship is fragile. One compliance review at the correspondent bank level and the whole corridor can close.
This is not a theoretical risk. The Pacific has seen initiatives including a digital voucher remittance system in Tonga (’Ave Pa’anga Pau) that allows cheaper remittances from Australia and New Zealand, but these have slowed rather than reversed the tide of CBR decline.
For importers, the consequences are real. Higher landed costs, longer payment cycles, unpredictable access to USD, and a structural disadvantage when negotiating with overseas suppliers who expect reliable, fast settlement.
Why stablecoins are actually well-suited here
Stablecoins are often discussed in the context of crypto speculation or DeFi. That framing misses what makes them genuinely useful for corridors like this one.
USD-pegged stablecoins like USDC and USDT have grown quickly on the back of demand for fast, low-cost cross-border transfers. The IMF has noted that digital money, including stablecoins, if carefully managed, can aid Pacific Island growth and equality, especially where financial access is critical.
The value proposition for Pacific trade comes down to a few concrete things. Bank wire transfers can take days to clear, while stablecoins move over blockchain networks that run nonstop, with settlement often happening within minutes, regardless of time zones, weekends, or holidays. For a Tongan importer who needs to confirm payment to a Singaporean supplier before goods ship, that matters enormously. The cost difference is just as stark. The global average for remittance fees was 6.49% in 2025, whereas sending stablecoins comes with much lower fees, typically only a few cents for every dollar sent. And because anyone with internet access and a smartphone can receive stablecoins even without a bank account, underbanked regions can bypass the traditional financial system entirely and still receive funds securely.
Perhaps most importantly, this is no longer the wild west. The GENIUS Act, signed into law on July 18, 2025, established the first federal regulatory framework for stablecoins in the United States, defining reserve requirements, compliance standards, and supervisory mechanisms, reducing legal uncertainty for traditional financial institutions. Circle obtained an MPI license in Singapore in September 2024, with its Singapore entity focusing on APAC institutional settlement, cross-border remittance, and USDC-SGD liquidity pool provision. The regulatory infrastructure is catching up to the technology, and fast.
What a practical architecture looks like
The interesting design question is not whether to use stablecoins but how you actually bridge TOP into USDC and back out into SGD/USD in a way that minimises regulatory overhead and operational complexity.
A few observations on what works in this corridor.
Use existing mobile money rails for collection. Tonga has MyCash via Digicel, a functioning mobile money network with real adoption. Rather than building new payment rails, a smart architecture rides these existing ones to accumulate TOP, converts periodically in bulk via bank wire to NZD, and from there into USDC on a licensed exchange. This keeps the on-the-ground experience familiar to Tongan users.
Put the complexity offshore, not onshore. The Tongan regulatory environment is improving but thin. The less novel financial activity conducted under NRBT oversight, the better. USD/stablecoin custody and payment initiation logic can sit in a NZ-domiciled entity with a more developed legal and compliance framework.
Use licensed off-ramps for the exit leg. The SGD/USD payout to the Singaporean exporter doesn’t need to be your problem. Licensed off-ramp providers holding MAS, FinCEN, and Banque de France authorisations can handle the USDC-to-SGD/USD conversion without you needing to hold any fiat foreign currency yourself.
The regulatory surface area is smaller than it looks. What you actually need is an MTO license or equivalent from the NRBT for the Tonga-side entity, FSPR registration and VASP registration in NZ for the custody and tech entity, and a commercial relationship with a licensed off-ramp. You are not issuing a stablecoin, not operating an exchange, and not touching SGD or USD on your own balance sheet. The licensing footprint is deliberately narrow.
The broader point
The Pacific has seen a 60% drop in correspondent banking relationships since 2011, double the world average. The World Bank’s $77 million Pacific Strengthening CBR Project is a meaningful institutional response, but it is fundamentally a defensive play. It tries to preserve a system that global banks are structurally exiting.
Stablecoins offer something different. A path that doesn’t depend on convincing reluctant correspondent banks to stay. The total stablecoin market cap surpassed $320 billion by early 2026, up from around $205 billion at the start of 2025, a 56% rise in a single year. The question has switched from whether stablecoins are technically viable to whether they represent a foundational infrastructure shift.
For Pacific trade specifically, that shift can’t come soon enough. The importers keeping Tonga’s shelves stocked deserve a payment system that works, one that doesn’t depend on the continued goodwill of a correspondent bank in Sydney deciding the compliance overhead is worth it this quarter.
There are real designs that make this work today. The infrastructure exists. The licenses are achievable. The corridor is ready.
The question is whether anyone builds it.