The Republic of Palau is an island country located in the western Pacific Ocean. It is geographically part of the larger island group of Micronesia. The country's population of around 21,000 is spread across 250 islands forming the western chain of the Caroline Islands. The most populous island is Koror. The islands share maritime boundaries with Indonesia, the Philippines, and the Federated States of Micronesia. The capital Ngerulmud is located in Melekeok State on the nearby island of Babeldaob.
The country was originally settled around 3,000 years ago most likely by migrants from the Philippines or Indonesia.by from the Philippines. The islands were sighted by the Spanish as early as 1522, when the Trinidad, the flagship of Ferdinand Magellan's voyage of circumnavigation, sighted two small islands naming them "San Juan". Later, the island were made part of the Spanish East Indies in 1885.
British traders became prominent visitors to Palau in the 18th century, followed by expanding Spanish influence in the 19th century. Following its defeat in the Spanish–American War, Spain sold Palau and most of the rest of the Caroline Islands to Germany in 1899.
The Imperial Japanese Navy conquered Palau during World War I, in 1914, and the islands were later made a part of the Japanese-ruled South Pacific Mandate by the League of Nations. During World War II, skirmishes, including the major Battle of Peleliu, were fought between American and Japanese troops as part of the Mariana and Palau Islands campaign. Along with other Pacific Islands, Palau was made a part of the United States-governed Trust Territory of the Pacific Islands in 1947.
Four of the Trust Territory districts formed a single federated Micronesian state in 1979, but the districts of Palau and the Marshall Islands declined to participate. Palau, the westernmost cluster of the Carolines, instead opted for independent status in 1978. It approved a new constitution and became the Republic of Palau in 1981. The islands gained full sovereignty in 1994 under a Compact of Free Association with the United States.
Politically, Palau is a presidential republic in free association with the United States, which provides defense, funding, and access to social services. Legislative power is concentrated in the bicameral Palau National Congress. Palau's economy is based mainly on tourism, subsistence agriculture and fishing, with a significant portion of gross national product derived from foreign aid. The country uses the United States dollar as its currency. The islands' culture mixes Japanese, Micronesian and Melanesian elements. The majority of citizens are of mixed Micronesian, Melanesian, and Austronesian descent, with significant groups descended from Japanese and Filipino settlers. The country's two official languages are Palauan (member of the wider Sunda–Sulawesi language group) and English, with Japanese, Sonsorolese, and Tobian recognised as regional languages.
Palau's economy consists primarily of tourism, subsistence agriculture and fishing. Tourist activity focuses on scuba diving and snorkeling in the islands' rich marine environment, including its barrier reefs walls and World War II wrecks.
This official coin commemorates the centenary of the First World War.