The Republic of Marshall Islands Will Issue its Own National Cryptocurrency
The Republic of the Marshall Islands officially became an independent, sovereign nation in 1979, and has since then has used the US dollar as its official national currency. The Honorable David Paul, Minister In-Assistance to the President of Marshall Islands, said in a press release today that the country is moving forward with its intentions of issuing its own sovereign currency that’s backed by blockchain technology.
One of key factors that led the country to choose the path of launching a national cryptocurrency is that “the growth of our money supply would be predetermined and tamper proof.” Blockchain is a revolutionary technology that unleashes endless opportunities for smaller, remote countries like the Marshall Islands to properly connect itself to the global financial system.
The Honourable David Paul said in a statement: “Relying on traditional fiat currency, the Marshall Islands has only fragile links to the wider world of international finance, and compliance is extremely resource intensive. Many of our citizens send or receive money using remittance services, paying fees of up to 10% per transaction. Even simple things like acquiring and installing ATMs become complicated when you’re in the middle of the Pacific Ocean!
But blockchain transactions are fast, simple, and cheap. Blockchain transactions are secure, because they’re replicated throughout a decentralized network. Most importantly, and despite its mathematical and technical complexity, blockchain is practically very simple. The only infrastructure needed for a blockchain-based digital currency is the network itself. We do not need to create a central bank and manage the printing and processing of paper money.
We chose to create a fixed money supply with fixed growth because fiat currencies can be remarkably unstable. For example, the Argentine peso recently fell 15% in a single day, while Venezuela’s currency, for all intents and purposes, no longer functions at all. 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.”
In 2018, the Marshall Islands passed the Sovereign Currency Act which declared its plans to issue its first national currency, the Marshallese Sovereign (SOV). While every country of course has the birthright to issue its own currency, what’s unorthodox in this scenario is that their first sovereign currency will be issued on the blockchain.
Because you can program compliance and the entire monetary system into the currency protocol itself, Marshall Islands’ will follow Milton Friedman’s K-Percent Rule which suggests an increase in the supply of money by a constant, sustainable percentage each year. The country has said it will grow its money supply at a 4% increase each year – which is about equal to the growth of their GDP. Ultimately, this means that country’s central government will not be able to tamper with or modify its money supply, nor will it be able to commit any type of currency manipulation via printing more money.
Paul went on to say: “For years, the Marshall Islands have been exploring ways to enhance its connectivity to the international financial system. By issuing a currency that is not physically embodied in cash, that can travel the globe instantly, and that is tamper-proof and completely secure, the Marshall Islands will finally be connected to the global financial system on its own terms.”