Last year, the Marshall Island passed the Sovereign currency act and declared their purpose to issue a new currency named SOV (Marshallese Sovereign) and they have completed their goal. The information revealed through an essay on Sep 4.
This new virtual currency will be used along with the dollar in the Island nation. The Sovereign Country Act (SCA) of 2018, issues and creates digitally decentralized cryptocurrency which would be used legally by the Republic of Marshall Islands.
The country which is located in the Pacific Ocean near the equator has chosen to issue its currency with the help of blockchain technology. The nation was using the US dollar as a means of money exchange since its independence in 1979. However, to keep up with the changing times the Marshall Islands decided to launch its virtual currency. David Paul, the Marshall Island’s Minister In- assistance to the president and environment, commented that the Marshallese sovereign would be used as a medium of exchange along with the US dollar.
Why Marshall Island Choose Blockchain Technology?
Blockchain will allow the money supply to be tamper-proof and pre-determined. The blockchain-based currency will be handled by providing the currency’s protocol thus providing the nation’s citizens with financial privacy and security.
Blockchain doesn’t require a big infrastructure; it only requires a network to get started upon the making of digital currency. There is no requirement for a central bank or printing and processing of conventional money. The blockchain-based transactions will be executed in a simpler, cheaper and faster way. Paul also noted that DLT (distributed ledger technology) based transfer is secure because they are replicated through a decentralized network.
Currently, the residents of Marshall Island are paying transaction fees when they send or receive money; this service fee goes as high as 10%. The country is located among many islands which makes it hard to reach here, so these islands don’t have ATMs because of their difficult installation and difficulty in filling up cash in the machines. The blockchain technology has made the lives of the people easier and now they have more options on how to invest in cryptocurrencies.
4% Growth In The Money Supply Each Year
After winning the unstable status of printed money, the government of Marshall Island has decided to put a limit on the money supply. Money shouldn’t be used as a limitless resource only because there is no limit to how much money can be printed. Paul recommends a sustainable approach to money by using iteffectively and in a limited manner. The new currency’s money supply would increase at the rate of 4% per year and the currency will also be divided equally among decentralized entities and individuals.
Looking at a large number of financial crimes which are carried out like terrorism financing and money laundering, a blockchain-based virtual currency can make international transactions easier and it will allow the Island nation to have a currency that is accepted internationally.
Merging New Currency Into The Existing Financial System
Citizens are required to complete their ID verification through an exchange or local bank to use SOV currency. The data will be saved with the government and wouldn’t be exploited by criminals. The government makes sure SOV follows the entire compliance requirement so that it can easily get on with the existing financial system. David Paul further elaborated that by providing a currency that can travel around the globe instantly in a secure and tamper-proof way. Marshal Island will be more connected to the global financial ecosystem.
The IMF (International monetary fund) even warned the RMI to not launch its cryptocurrency because of the small revenue issued; the RMI still went on with the launch of its digital currency.
Marshall Island is a country with over 50,000 people spread over 1000 pacific islands; blockchain has allowed the Marshallese people to gain monetary independence by following their values.
Tags: Cryptocurrency News, Blockchain, DLT, Marshal Island, IMF, Financial Crimes
Image by David Peterson from Pixabay
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