The Marshall Islands has made a historic leap by launching a pioneering universal basic income (UBI) program that incorporates cryptocurrency alongside traditional payment methods. This initiative is touted by experts as a groundbreaking model, aiming to provide vital financial support to the nation’s citizens amid escalating living costs.
Starting in late November, every resident citizen is set to receive quarterly payments of approximately $200, totaling around $800 annually. Participants in this program have the choice to opt for payments via bank accounts, checks, or a government-backed digital wallet utilizing blockchain technology. Finance Minister David Paul clarified that the UBI is designed to ensure that no citizen is left behind, aiming to uplift morale rather than discourage employment.
The Marshall Islands, an archipelago of about 42,000 residents situated between Hawaii and Australia, has instituted this UBI as a “social safety net” to tackle the challenges of rising expenses and a dwindling population. Funding for this initiative springs from a trust established under an agreement with the United States, which compensates the islands for the long-term ramifications of U.S. nuclear testing. This trust exceeds $1.3 billion, with an additional commitment from the U.S. of $500 million through 2027.
Dr. Huy Pham from RMIT University has praised this UBI rollout as pioneering, particularly highlighting its nationwide application of blockchain technology. The integration of cryptocurrency, in the form of a stablecoin pegged to the U.S. dollar, seeks to alleviate logistical issues associated with payment distribution across the widely dispersed islands.
However, experts warn that the success of this digital financial inclusion effort may be hampered by inconsistent internet connectivity in the region. Dr. Pham emphasizes that improving access to the internet and smartphones is crucial for fostering a successful blockchain-based economy.
Thus far, most recipients have preferred traditional payment options, with about 60% of the initial payments directed into bank accounts and the remainder issued as checks. Only 12 individuals selected digital payments. Finance manager Anelie Sarana reported that the funds are primarily used for essential expenses, while some recipients have also utilized the UBI for local celebrations, such as the Gospel Day holiday.
This is not the first venture into cryptocurrency for the Marshall Islands; in 2018, attempts to launch a national cryptocurrency called Sovereign (SOV) encountered obstacles after warnings from the International Monetary Fund (IMF). The IMF has since expressed concerns about the potential risks associated with a blockchain-based UBI, emphasizing the need for strong governance and oversight.
Dr. Monique Taylor from the University of Helsinki acknowledged the uncertainties surrounding this UBI initiative but pointed out the potential benefits for small island nations. In areas where traditional banking services are scarce, a digital wallet could facilitate transactions, making financial access easier for residents of remote atolls.
The Marshall Islands’ UBI program stands as an ambitious test case for innovative financial support mechanisms, particularly for isolated communities. Its association with blockchain technology not only signifies a commitment to modernization but also presents a hopeful avenue for developing sustainable solutions to the economic challenges faced by small island nations.