An official from the Marshall Islands in a post, highlighted the country’s ambitions for a national cryptocurrency project and it was posted just ahead of the Invest: Asia 2019 conference. The post talked about the issuance of Marshallese sovereign (SOV), a blockchain-based cryptocurrency which will be distributed and operated by the Marshall Island government. The country takes in almost $70 million as U.S. aid money every year to meet its expenses and now it wants to stop its reliance on U.S. aid.
Honorable David Paul, the minister in assistance to the President and Environment of the Marshall Islands wrote the post which was published by CoinDesk on 4th September.
Marshall Islands also passed a Sovereign Currency act in 2018, that will lay the foundation of a national digital currency, replacing the United States dollar as the primary currency.
Marshall Islands has been independent since 1979, however, till now the country uses United States Dollar as the primary form of currency. The USD is used for payments, debts, taxes, dues and public charges in the Marshall Island.
In the post, Minister Paul said that the choice of blockchain over a centralized system was made due to one simple reason. The country has a little over 50,000 people spread across 1000 Islands in the Pacific, and a centralized system would not be able to work.
The minister said that the decentralized blockchain would offer compliance “baked into the currency protocol itself while maintaining privacy for individuals.” The minister also highlighted that the automation of system would help in lowering the cost of compliance obligation for the country than the current system, and will also help the country taking a proactive role in the global fight against money laundering and other financial crimes. The currency will also help in minimizing the cost of remittance services that are still very costly in Marshall Islands.
The minister also talked about security features for the currency, saying that Banks and Exchanges would be tasked with verifying the identity of the SOV users and thus would control any loopholes that may occur due to oversight.
He said that with these measures, the country will also aim to protect the financial privacy of its people as far as it can. The essay states:
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.
In the post, the minister also talked about supply of the cryptocurrency. Saying that each year the supply of the cryptocurrency would be capes, and only 4% increase would be allowed per year. This measure was taken to create a fixed money supply which shall not be considered as a limitless resource. He argued that:
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.