Year-long plans by the Republic of the Marshall Islands to escape its dependence on the U.S. dollar and issue its own state-backed cryptocurrency could soon become a reality.
David Paul, the Minister-in-Assistance to the President of the Marshall Islands, published an essay on Wednesday in which he explained why the country is moving forward with its plans. According to the post, Minister Paul will provide further details about the Marshall Islands’ crypto, the Sovereign, next week at the Invest: Asia 2019 conference.
But the road to the Sovereign for the Marshall Islands has not been easy.
The idea for its very own cryptocurrency first surfaced in February 2018, after the passage of the country’s Sovereign Currency Act of 2018. This quickly placed the Marshall Islands on the radar of crypto enthusiasts around the world—but it also caught the attention of the International Monetary Fund (IMF).
Within months, the IMF began putting pressure on the Marshall Islands to not forego the U.S. dollar in favor of its own digital currency. The Fund issued a 58-page report in September 2018 and warned against the “potential costs arising from economic, reputational, AML/CFT, and governance risks” associated with the issuance of the Sovereign.
In its report, the IMF advised that “authorities should seriously reconsider the issuance of the digital currency as legal tender.”
That advice, however, was widely perceived at the time as a threat, given that the tiny island nation relies heavily on other countries for economic aid, especially the United States.
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Two months after the IMF’s move, a group of eight legislators introduced a motion of no confidence against Marshall Islands President Hilda Heine. One of the reasons cited in the action was her decision to issue an official cryptocurrency.
Heine ultimately survived the vote, and the idea for the Sovereign remained alive, flying mostly under the radar until Minister Paul’s announcement earlier this week.
Paul reiterated the fact that the country’s digital currency is intended to reduce the Marshall Islands’ dependence on the U.S. dollar—which the country has used as legal tender since 1979. Sovereign tokens, he explained, would be issued on a blockchain with a fixed growth on its supply to ensure a monetary policy that is more transparent and less prone to manipulation.
As for what happens next, the ball is seemingly in the Marshall Islands’ court. But one thing seems certain: the little island nation isn’t going to be intimidated out of pursuing its sovereign crypto aspirations.