The Marshall Islands is moving forward with its plans to develop a blockchain-based national digital currency that the government hopes will reduce reliance on the U.S. dollar, Bloomberg reported on Wednesday. When launched, the Marshallese sovereign (SOV) is expected to be recognized as the island nation’s legal tender.
While attending a conference in Singapore, environment minister David Paul detailed the government’s reasons for pursuing the project. According to Paul, the rise of blockchain technology presented an opportunity for the country to create its own legal tender. That’s something that officials have been considering since regulations for U.S. dollar transactions were tightened in the aftermath of the September 11, 2001 terrorist attacks.
Paul also noted another issue that the government hopes to address by issuing its own currency:
“Right now we have only one relationship with one correspondent bank, and if that’s lost we would be cut off,” Paul said, identifying First Hawaiian Inc. as that bank. “A correspondent banking relationship is commercial, and a nation being held hostage by a commercial relationship shouldn’t be the case.”
Right now, there is no firm date set for the launch of the SOV. Paul said that there are still regulatory issues to address, and the government plans to work with relevant organizations like the IMF and U.S. Treasury to ensure that everything is done properly. Even after the SOV is issued, the plan is to allow Marshall Islands residents to continue to use U.S. dollars in addition to the new digital currency.