David Paul, Minister of Assistance to the President of the Marshall Islands in an essay on September 4, 2019, revealed that the Marshall Islands is on the verge of issuing its blockchain-based sovereign currency dubbed Marshallese sovereign (SOV). SOV will have a fixed annual supply growth rate of four percent and it will be used alongside the U.S. dollar.
Marshall Islands Gaining Financial Sovereignty
Per the essay, the Republic of the Marshall Islands, a country in Oceania which was colonized by the United States for 40 years, is still dependent on the U.S. dollar as its legal tender.
However, Marshall Islands passed a Sovereign Currency Act in 2018, revealing its intentions to launch SOV in a bid to bring about monetary independence.
Along with its goal to launch SOV, the country made three decisions. The first decision was to adopt blockchain technology in creating a new legal tender, SOV, which will be used alongside the U.S. dollar in the country.
Likewise, it made plans in the aspect of money supply, SOV’s compliance, and users’ privacy.
In the area of blockchain technology, David Paul remarked that the distributed ledger was chosen because it is simple, cheap, fast, and secure.
Its simplicity takes away the need for banks to manage the minting and processing of fiat since a blockchain-based digital currency only requires a network, he said.
As a result, it can be highly beneficial to about 50,000 citizens in the country who currently rely on fiat but are charged up to 10 percent as transaction fees for cross border payments.
Earlier in November 2018, BTCManager informed that Hilda Heine, President of the Marshall Islands had expressed optimism over blockchain’s potential to create a new historic moment for the Marshallese people and once again, manifest their national liberty.
Heine’s comment was made after the nation’s cryptocurrency ambition received a no-confidence vote in 2018. The 68-year-old also faced opposition from the local Parliament and International Monetary Fund (IMF).
When it comes to the area of money supply, David Paul says DLT will ensure SOV maintains a fixed supply and fixed growth of four percent each year and the state-backed cryptocurrency will be automatically distributed to fiat holders and decentralized entities that secure the network.
The government says it will work hard to ensure SOV is compliant with international anti-money laundering and other regulations to make SOV globally acceptable, while also prioritizing users privacy by allowing them to choose what information they share with exchanges and banks that will verify their identity.