On 10. January 2019 showed the Team behind a national crypto-currency for the Republic of the Marshall Islands (RMI) — Sovereign (SOV) — that the Coin is developed despite previous disagreements among government representatives still active, although there are reservations from the International monetary Fund (IMF) and the US Department of the Treasury on this subject.
the idea behind The SOV project is based on the aspirations of the RMI government, “national freedom [of the RMI] to the expression” as well as the creation of an alternative U.S. Dollar-the currency for the small island state for decades.
to publish Behind-the-Scenes of the decision, a national crypto
The Republic of the Marshall Islands is an island country located near the Equator in the Pacific ocean and consists of 29 atolls and five individual Islands, totaling approximately 1.225 Islands. The country has been managed over a period of 40 years from the USA as part of the Trust Territory of the Pacific Islands, and obtained in 1986 under the Compact of Free Association independence.
Currently receive the Marshall Islands use the US Dollar as its official currency, and are “highly dependent on U.S. grants and spend”. This is according to the Pact, to about 62 million Euro per year. Once the SOV is issued, will circulate alongside the Dollar, so that the Marshall Islands will have two parallel currencies, “for all debts, public charges, taxes and duties”.
The Sovereign was first introduced in February 2018, as the Parliament of the Marshall Islands passed a law that allows the release of its new national digital currency provides in the context of an Initial Coin Offering with an initial total of 24 million units, to Inflation, to avoid. Some cash, which was collected by the ICO, is supposed to be used for the health care for approximately 53,000 citizens of the country falling in the past few years, the consequences of the nuclear tests of the USA to the victims.
the President of The RMI, Hilda C. Heine, said at the time: “This is a historic Moment for our employees, we finally give out in addition to the USD of our own currency and use it. It is a further step to manifest our national freedom.”
implement the SOV Initiative, the RMI government, in partnership with the Israeli Fintech Startup Neema. Barak Ben-Ezer, CEO of Neema, told the press: “This crypto-currency, the Sovereign, is completely decentralised and the government can’t control the money supply. After the [crowdsale] you have no control over the currency.”
Peter Dittus, chief economist and co-founder of SOV Global and former Secretary-General of the Bank for International settlements, explained to Cointelegraph that the decision to develop a national digital and does not have a national Fiat currency, for several reasons. Dittus, according to developing countries, such as the RMI, have to struggle with the high cost of remittances, and a statutory cryptographic means of payment creates a Situation in which the solution is more costly return is credit transfers in the currency system itself is “burned-in”. In addition, the introduction and implementation of a Central Bank-managed Fiat currency with a costly predominate, where “for a small country, the costs, the benefits clearly”.
The further development of the SOV is from the IMF and the U.S. Treasury Department in question
Later, in September, expressed the International monetary Fund (IMF), however, doubts as to the emissions of SOV and claimed that “the potential benefits of revenue increases is much lower than the potential cost arising from the economic, prestigious, AML [Anti-Money Laundering] / CFT [combating the financing of terrorism], and Governance risks.”
The IMF warned the Mars hall authorities also prior to the introduction of the Cryptocurrency and noted that this would endanger the financial integrity of the country, as well as the relations to foreign banks. The regulatory authority asked the RMI to rethink the issue of a crypto-currency, until the government is able to “strong policy framework” to provide and to implement.
Dittus pointed out that SOV will differ from most digital currencies, as it has measures to prevent abuse. It emphasises the need to work closely with regulatory authorities, financial institutions and stock exchanges to work together to ensure that the rules of Know Your Customer [KYC] implemented apply, and that AML functions are not bypassed. “ This allows the RMI allegedly, the development of new Governance capacities and a wider introduction of technology within the country.
In relation to the possible instability of the financial system of the country, caused by the volatile nature of the crypto-currency, said Dittus, that the establishment of a Bank of SOV was planned in the RMI, which will help to provide other banks with SOV-services, hedge risk, and facilitate transactions. Dittus added, however:
“Basically, there is no guarantee the banks, nor the government, a conversion between the SOV and the USD at a fixed rate, thus reducing the financial instability would be limited.”
Heine Plan, a state-run Cryptocurrency, to solve political instability
in Spite of the perceived benefits of the concept for a national digital currency, the RMI, the President of Heine in November in connection with the plans of your government, SOV implement a vote of no confidence. The vote was introduced by a group of eight senators, and the former President Casten Nemra said that the plans for the introduction of a digital currency as a legal tender would have had a negative impact on the reputation of the country and also the arguments of the IMF and the US Treasury increased.
Six days later, it was reported that Heine, the confidence had survived the vote. The Mars hall, Parliament had allegedly voted 16-16, only one vote under the required number, the Heine to resign would be initiated. RMI-Finance Minister Brenson Wase said that the government would proceed with SOV and waiting to meet the requirements of the IMF, the USA and Europe.
As a comment to this Situation, Dittus:
betote “The IMF has approved CDBCs and its managing Director Christine Lagarde has highlighted the potential benefits in particular for smaller economies. So far however, no sovereign crypto-currencies implemented. The Marshall Islands have declared as the first state of the status of legal tender. The challenge now is to make it a reality. And that is very motivating.”
The SOV Team announced that it had “made significant progress in the search for partners, investors, and developers” for the realization of the project and intend to start SOV in the year 2019. The project also announced a new partnership with a Startup company, Tangem, Switzerland, and Singapore working and “smart banknotes”.
While the Initiative has been criticised by major financial organisations and government representatives, as seems to be the SOV-to be a Team confident, if the idea of a national digital currency and its impact on the further development of the country are viable. Dittus also introduced the possibility, later, a Stabilecoin variant to introduce, and added:
“The issue of the SOV is controlled by the rules embedded in the Blockchain. The initial amount of money is 24 million units. Each year, this will increase the total range of four percent, which implements a proposal of the late Prof. Milton Friedman. In contrast to other Fiat-where the new money to private banks will be issued, distributed currencies for new SOV shares Pro rata or per capita to the SOV-holder. Because the SOV-offer is in line with the global GDP [gross domestic product] along with this, it is likely to lead over time to a relatively stable exchange rates against Goods. “
