An official from the Marshall Islands published an essay explaining the country’s national cryptocurrency project ahead of the invest Asia 2019 conference.
The issue of the extradition of the Marshall Sovereign (SOV) was discussed in an essay by David Paul, the Minister for Assistance to the President and the Environment of the Marshall Islands, published by Coindesk on September 4.
Connected to the global financial system on its own terms
In 2018, the Marshall Islands decided on the need to create a new state currency. In addition, they decided to release an analogue of their cryptocurrency. This decision was made due to the fact that from 1979 to the present, the country uses the US dollar in the form of the main currency for state fees, payments and taxes.
This year, the country’s dependence on US grants is about $ 70 million per year.
Minister Paul in an essay focuses on why the country decided to issue a second legal tender based on blockchain technology. This is due to the belief that centralized solutions are not feasible, since only a little more than 50,000 people live on more than 1000 islands.
Doubts about advantages
In addition to decentralization, the blockchain offers the country the opportunity to “comply” with the “built-in currency protocol”, according to the minister, “while maintaining confidentiality for individuals.
Paul argues that the idea of blockchain technology will help the state automate most of its processes. In particular, the processes associated with existing payment systems, and thus helps the state to play a more active role in the global fight against terrorist financing and money laundering.
Approved entities, such as banks or exchanges, will be instructed to close anonymity loopholes by verifying the identity of SOV users. The Minister claims that the country will strive to protect financial confidentiality as much as possible:
“It is imperative that individual users have reasonable expectations of confidentiality, in particular, the ability to choose when to disclose your information, what exactly and to whom to share.”
Governments do not need to consider money as a “limitless resource” on Marshall Islands
Minister Paul notes that SOV will have a fixed, tamper-resistant money supply and that its growth will be predetermined at 4% per year. He claims that:
“We decided to create a fixed money supply with a fixed growth, because paper currencies can be surprisingly unstable. […] The policies of large central banks are not encouraging, as gold and bitcoin prices suggest. We, governments, need to be more sustainable in their approach to money, and not view it as a limitless resource.”
Other aspects of the essay point to the fact that money transfer services are currently very expensive for citizens and switching to a blockchain-based system can help reduce costs.
Recently it was reported that China is also preparing to launch a blockchain-based digital currency supported by the central bank for use in retail scenarios.