Heine Survives No Confidence Motion

The President of the Marshall Islands, Hilda Heine narrowly survived a no confidence vote that had been set in motion due to her plans of introducing a national cryptocurrency. The only woman head of state in the Pacific survived the no confidence vote thanks to the parliament being split 16-16. The only reason the opposition did not win is because they lacked the 1 extra vote needed to have her removed from power.

Conflicts in the Government

The Marshallese parliament had originally backed the idea of creating a national cryptocurrency. However, later, 8 senators and the former president of the island nation, Casten Nemra, accused President Heine of tarnishing the country’s reputation with this proposition of introducing a state-backed cryptocurrency.

Nemra had reportedly fueled political dissent within the parliament by highlighting the government’s failure in investigating the $1 billion that had disappeared from the Marshall Islands Trust Fund. This fund had been set up by the United States to compensate the people of the island nation for nuclear tests that had been conducted near their country.

Another issue that Nemra raised was the plan announced by the Chinese to turn Rongelap, a Marshallese atoll, into a special administrative zone, which would have a duty-free port and a facility for offshore company registration at Rongelap. Heine looked at the Chinese announcement as an invasion of Marshallese sovereignty, while those who were opposing her were in support of China’s plans.

The Sovereign

This new crypto is called the Sovereign (SOV) and will be launched in February 2019. It will be used alongside the US Dollar, which is the island nation’s official currency.

Reportedly, the plan to create a state-backed cryptocurrency was triggered by the Marshallese government’s partnership with an Israeli startup called Neema.

Neema, it seems, had managed to persuade the government that a state-backed digital currency project could bring in as much as $30 million in revenues, only half of which would go to Neema.

The Marshallese Finance Minister Brenson Wase announced – after the no confidence vote failed – that the government was going to go ahead with its plans of launching the SOV. The only thing they were waiting for was to fulfil regulatory requirements from the International Monetary Fund (IMF), the US and Europe.

The IMF had, however, already warned the Marshallese government that the risks of creating a cryptocurrency as a second legal tender were very high. The organization stated that the monetary benefits were outweighed by the possible costs. The IMF also warned that the country’s reputation could be hurt, relationships with foreign banks could be compromised and the company could ended up being a hotbed for money-laundering and terrorist financing.