On September 4th, the Honourable Minister In-Assistance to the President and Environment of Marshall Islands, David Paul, officially announced that the country would issue its own sovereign currency in a digital form, leveraging blockchain technology. The announcement came as a part of an essay presented during Invest: Asia 2019 at a series primarily focused on how the Asian crypto markets are involving with and impacting global investors.
Ever since 1979, when the Republic of the Marshall Islands gained status as an independent democratic nation, the country has been using the US dollar as their official currency for paying all sorts of payments, taxes, debts, and dues. Only last year, along with the Sovereign Currency Act, the government issued a new currency, the Marshallese sovereign (SOV), which remained in use alongside the US dollar.
The introduction of the Marshallese sovereign, the very first Marshallese currency, has been essentially based on three key factors. And the foremost of them was that the currency had to be a blockchain-based one. It’s crucial for the Marshall Islands chiefly because these transactions since replicated via a decentralized network, are faster, simpler, cheaper, and more secure.
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Complete dependence on a traditional fiat currency only makes the Marshall Islands more vulnerable to the turmoil of international finance. On top, a lot of their citizens carry out transactions through remittance services which demands fees as much as 10% every transaction. Simple things such as acquiring and installing ATMs get complicated in a country spread across over 1,000 islands right in the middle of the Pacific Ocean. On the flip side, a blockchain-based currency paves the way for a practically simpler system, despite all the mathematical as well as technical complexities it requires. In a decentralized system, there’s no need for a central bank to manage the printing and processing of paper-based money because a network is all that’s needed for the blockchain-based SOV.
Minister Paul states in his essay,
It is crucial that individual users should have a reasonable expectation of privacy—specifically, the ability to choose when to disclose your information, what exactly to share, and with whom.
The essay also explains the SOV will have a pre-determined and tamper-proof supply of money supply, the growth of which has been predetermined at 4% per year. Paul backs it by saying,
We chose to create a fixed money supply with fixed growth because fiat currencies can be remarkably unstable. The policies of major central banks are not reassuring, as the gold and bitcoin prices attest. We as governments need to take a more sustainable approach to money, and not treat it as a limitless resource.
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On a global scale, central banks in Russia and China have already announced trial runs on their digital currencies’ prototypes, to compete with existing rivals like Bitcoin and Ethereum.
