Freelance journalist Alfred Sasako penned the news piece, which the paper published on its front page, Monday.
But Chad Morris, Public Affairs Officer at the Port Moresby-based US Embassy said the story is “false and unfounded”.
“The story in the Island Sun regarding US dollar transactions is completely untrue,” Morris said.
“No US government policy exists and we are not making an attempt to ‘block’ access to USD,” he added.
“It appears Sasako has conflated the policies of Western Union, a private company, with the policies of the US government – had he contacted me, I could have told him that.
“The United States government continues, and will continue, to work with the government and people of Solomon Islands.
“The United States respects Solomon Islands’ sovereignty and its right to self-determination.
“Speculation on changes in US government policy with regard to the use of US dollars in Solomon Islands is unfounded,” Morris stated.
Sasako’s report claimed the decision by the US Government will effectively lock out the Solomon Islands Government from using USD account for all its international transactions.
Those familiar with international financial transactions said the claim Sasako made in his report was unheard of.
“There’s no such thing as that. Sasako must have cooked up that story.”