The Marshall Islands have chosen to turn away from the U.S. dollar, instead opting for a digital currency to become the foundation for transactions on the island nation. This, according to a press release issued by the government on June 6.
The plan to use digital currency instead of a fiat currency has been floated in the country since May of last year, when the Marshall Islands chose to make their own cryptocurrency the legal tender of the nation. This did not sit well with the IMF, which warned the government that using cryptocurrencies as their legal tender was simply not a good idea.
These warnings seemed to have been gaining some traction, as by November there was speculation that the government would abandon their plans to introduce a national cryptocurrency as the legal tender. Yet, just days later the plan was being pushed forward and by January of this year the Marshall Islands had reached out to a Swiss firm to help them to create the sovereign crypto banknotes.
Now it appears that the plan is full steam ahead, as the Marshall Islands have set up a non-profit group to oversee the nation’s digital legal tender, which will be referred to as the “Sovereign.” This firm, referred to as the SOV Development Fund, will work to develop, implement, and maintain all of the infrastructure related to the development of this new currency. According to a release by the government, the SOV will be used both within the country and abroad. The goal is to make this a stable currency that can grow.
Dr. Peter Dittus, who will function as a cheap economist for the SOV and is the former secretary general of the Bank of International Settlements, explained:
“The SOV Development Fund’s mandate is to maintain the SOV infrastructure long term; to seed the ecosystem around the SOV; to promote the SOV and its uses, both domestically and internationally; [and] to smooth the volatility of the SOV by selling and buying SOV against USD.”
The implementation of this plan will eliminate the need for physical cash. This plan is so ambitious that they are hoping that by the end of the year the cryptocurrency will be implemented and all fiat currencies will become irrelevant. This eliminates the need for people to use banks, as long as the government is able to fully implement and protect user accounts.
There are currently about 50,000 people on the Marshall Islands, making it the ideal location to experiment with such a venture. While this seems to be a perfect solution for the island inhabitants, there is some question about how it will affect those who visit the nation. Those details have not been worked out yet, but will be part of the SOV Development Firm’s implementation and design plan.
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