This essay is presented as a neighborhood of No Closing Bell, a series leading up to Invest: Asia 2019 focused on how the Asian crypto markets are interacting with and impacting global investors. to stay the conversation getting into person, register for Invest: Asia 2019 arising in Singapore on Sept. 11-12.
Since becoming an independent democratic nation in 1979, the Republic of the Marshall Islands has used the US dollar as money. Today we are progressing with our decide to issue a sovereign currency in digital form – using blockchain technology.
Last year, we passed the Sovereign Currency Act, declaring our intention to issue a replacement currency, the Marshallese sovereign (SOV), which we’ll use alongside the dollar. Issuing a currency is in fact the prerogative of any sovereign nation, but what’s unprecedented is that we’ve chosen to issue our sovereign currency using blockchain technology.
We made three key decisions once we chose to issue our currency. First, that the currency would be supported blockchain technology – this is often vital for us within the Marshall Islands, for reasons i will be able to outline below. Second, that the expansion of our funds would be predetermined and tamper proof. And, last but not least, that compliance would be baked into the currency protocol itself, while maintaining privacy for people .
The advent of blockchain technology has opened a world of opportunity for little nations like ours. counting on traditional fiat currency, the Marshall Islands has only fragile links to the broader 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 within 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 significantly , and despite its mathematical and technical complexity, blockchain is practically very simple. the sole infrastructure needed for a blockchain-based digital currency is that the network itself. We don’t got to create a financial institution and manage the printing and processing of folding money .
We chose to make a hard and fast funds with fixed growth because fiat currencies are often remarkably unstable. for instance , Argentina peso recently fell 15% during a single day, while Venezuela’s currency, for all intents and purposes, not functions in the least . The policies of major central banks aren’t reassuring, because the gold and bitcoin prices attest. We as governments got to take a more sustainable approach to money, and not treat it as a limitless resource.
Our funds will grow at a sustainable 4% annually , following Milton Friedman’s k% rule. New SOV are going to be automatically distributed to the currency holders and therefore the decentralized entities securing the network. this suggests that we in government cannot modify the cash supply, and that we cannot manipulate the worth of our currency by printing extra money .
Finally, our currency must be internationally accepted. Post 9/11, concealment and financing of terrorism are major threats that the worldwide community is fighting together. But without our own currency, and beholden to existing systems, it’s hard for us to contribute much to the present fight beyond basic compliance. With a digital currency supported blockchain, we will automate much of the compliance burden and take a proactive role on the international stage.
Every individual using SOV must be identified by an approved verifier of their choice, like a bank or an exchange. this may close the secrecy and anonymity loopholes exploited by criminals and terrorists. However, it’s crucial that individual users should have an inexpensive expectation of privacy – specifically, the power to settle on when to disclose your information, what exactly to share, and with whom. We are committed to providing this privacy with SOV.
The Marshall Islands are working closely with international regulatory bodies to make sure SOV meets all compliance requirements and may be fully integrated into the international financial ecosystem. In fact, SOV is being digitally engineered from the bottom up to stop misuse, unlike paper currencies.
For years, the Marshall Islands are exploring ways to reinforce its connectivity to the international economic system . By issuing a currency that’s not physically embodied in cash, which will travel the world instantly, which is tamper-proof and completely secure, the Marshall Islands will finally be connected to the worldwide economic system on its own terms.
It may seem surprising that the Republic of the Marshall Islands would be issuing a currency supported blockchain technology, but actually it’s just the opposite: the Marshallese people have lived with decentralized systems for many years. For us, a rustic of just over 50,000 people spread across quite 1,000 Pacific islands, centralized solutions aren’t just inefficient: they’re completely unworkable. Blockchain has given us the chance to finally acquire monetary independence during a way that reflects Marshallese values. We shall grasp that chance , innovatively and responsibly.
Minister Paul will make an announcement round the Marshall Island’s sovereign issuance at Invest: Asia 2019.