The Marshall Islands has made history by launching a groundbreaking universal basic income (UBI) program that utilizes cryptocurrency alongside traditional payment methods. This initiative, claimed by experts to be the first of its kind globally, aims to provide financial relief to the nation’s citizens amidst rising living costs.
Under the new scheme, every resident citizen will receive quarterly payments of approximately $200, which amounts to about $800 annually. The program kicked off in late November, allowing recipients to opt for payments through bank accounts, checks, or a government-backed digital wallet using blockchain technology. Finance Minister David Paul emphasized that the intent behind the UBI is to ensure that no citizen is left behind, highlighting its role as a “morale booster” rather than an incentive to cease employment.
The Marshall Islands, an archipelago with a population of around 42,000 situated between Hawaii and Australia, has designed this UBI as a “social safety net” to combat the challenges posed by increasing expenses and a declining population. The funding for this ambitious initiative comes from a trust established through an agreement with the United States, which compensates the islands for the impacts of decades of U.S. nuclear testing. This trust fund exceeds $1.3 billion, with the U.S. pledging an additional $500 million up until 2027.
Dr. Huy Pham from RMIT University describes this UBI rollout as pioneering, particularly for its use of blockchain technology nationwide. The use of cryptocurrency, specifically a stablecoin pegged to the U.S. dollar, aims to solve logistical problems of payment distribution across the geographically dispersed islands.
Despite this innovative approach, experts caution that the digital financial inclusion offered by the UBI may face challenges due to inconsistent internet connectivity in the region. Dr. Pham notes that improving access to the internet and smartphones is vital for a successful blockchain-based economy.
So far, most recipients have opted for traditional payment methods; around 60% of the initial payments were deposited directly into bank accounts, with the rest issued as checks. A mere 12 individuals have chosen to receive their payments digitally. Finance manager Anelie Sarana shared that the funds are being utilized for essential costs, with some citizens leveraging the UBI for community celebrations such as the Gospel Day holiday.
This innovative step is not the first for the Marshall Islands regarding cryptocurrency. In 2018, efforts to establish a national cryptocurrency called Sovereign (SOV) faced challenges after warnings from the International Monetary Fund (IMF). The IMF has since raised concerns about potential risks involved in implementing a blockchain-based UBI, stressing the importance of robust governance and oversight.
Dr. Monique Taylor from the University of Helsinki acknowledged the uncertainties surrounding this UBI initiative but indicated potential advantages for small island nations. In areas where conventional banking is difficult to access, a digital wallet could streamline transactions, enhancing accessibility for individuals living in remote atolls.
The Marshall Islands’ UBI program, while innovative and ambitious, stands at the forefront of a possible new trend in financial support mechanisms, especially for isolated communities. The initiative’s alignment with blockchain technology not only reflects a commitment to modernization but also offers hope for more sustainable solutions to economic challenges faced by small island nations.