Part 2 of 7: Financial Access and the Path to USDM1
Political System
The RMI joined the United Nations in 1991. Since then, it has aligned its laws and regulations with global standards, strengthened its institutional capacity and worked alongside trusted international and multilateral partners. The RMI votes in the UN General Assembly as a full member. The country has consistently been rated “Free” by Freedom House for its civil liberties and political rights, with a parliamentary system that delivers regular elections, peaceful transfers of power and an independent judiciary.
Fiscal Discipline
Successive government administrations have strengthened fiscal frameworks, built precautionary buffers and undertaken structural reforms designed to withstand shocks. The result – achieved across a challenging geography – is a resilient political and institutional foundation that supports prudent fiscal policy, investment and innovation.
To strengthen its position further, the RMI has enacted a series of reforms constructing the legal and institutional pillars of a modern digital economy. The Fiscal Responsibility and Debt Management Act anchors fiscal discipline, transparency, and investor protections in law. The RMI Banking Act and updated AML/CFT framework are fully aligned with FATF standards, including the latest guidance for virtual- asset service providers. The RMI’s electronic-transaction, cybersecurity, and digital-identity frameworks have been strengthened to ensure digital infrastructure can develop within a trusted legal environment.
The establishment of the Marshall Islands Monetary Authority (MIMA) – an independent regulator consolidating oversight of banks, money-service businesses and payment systems – further strengthens these reforms, with a mandate to safeguard financial stability and ensure the RMI’s regulatory architecture is aligned with international prudential norms.
Locally-based banks in the country remain well-capitalized and highly liquid. Tier-1 capital ratios stand at approximately 15 percent, and liquid assets account for roughly 75 percent of deposits, far above the statutory 20 percent minimum.
Expanding Digital Access
The RMI is on a path to near-universal smartphone penetration. However, given its geography – spread across nearly two million square kilometers of the Pacific, an area four times the size of California – consistent digital connectivity has been difficult.
In recent years that barrier began to disappear, slowly then rapidly, with national contracts for Starlink deployment and the nationwide rollout of low-Earth-orbit (LEO) satellite internet. In just the last several months the country’s digital landscape has effectively been transformed, and even the most remote households are now able to reliably access the internet. By 2026, every inhabited atoll will have high-speed connectivity.
This connectivity expansion represents one of the most significant infrastructure upgrades in the nation’s history and lays the foundation for the next generation of digital public services to operate at national scale – accelerating modern service delivery in support of financial inclusion.
Sovereign Wealth
Where distance functions as a structural economic tax on households, ENRA – the RMI’s Universal Basic Income program – provides a path to help offset these burdens. ENRA, symbolizing community, care, and shared prosperity, is the world’s first nationwide, long-term Universal Basic Income program, and the most extensive public-enrollment initiative in RMI history. It provides regular, predictable support to households and families across all atolls. ENRA is funded from the Compact Trust Fund for the People of the Republic of the Marshall Islands. In mid-2025, total trust-fund assets exceeded $1.3 billion, with up to $500 million in additional contributions committed through 2027. The source of these funds is deeply rooted in the RMI’s history and its current context.
Between 1946 and 1958, the RMI was a U.S.-administered territory and the site of a major U.S. military base. It became the United States’ first large-scale Cold-War nuclear testing ground, and was the focal point of extensive nuclear experimentation. Some tests were conducted on land, some underwater and some on offshore barges. One specific detonation – the Castle Bravo test – had more than 1,000 times the explosive force of Hiroshima, and is the largest and most powerful U.S. nuclear test in history.
In total, the explosive yield of nuclear tests conducted in the RMI equated to the force of 1.6 Hiroshima- sized bombs being dropped every day for 12 years. When the tests ended in 1958, the country faced widespread radiation exposure and many communities experienced forced displacement – impacts that have persisted across generations.
The Marshallese people also face a separate and ongoing displacement threat from rising sea levels. Although the country’s highest natural elevation is roughly ten feet, much of its populated land lies only one to two meters above sea level. Sea levels in the region have been rising at more than three millimeters per year, driven by thermal expansion as oceans absorb excess heat and by the melting of land-based ice sheets in Greenland and Antarctica. These pressures compound the challenges faced by all citizens.
Trust Fund for the People of the Republic
The RMI became a fully sovereign nation on October 21, 1986. On this date, it also entered into a Compact of Free Association with the United States, which was amended and re-signed on April 30, 2003. Together, these compacts provided over a billion dollars in grants, trust-fund contributions and support. More recently, on October 16, 2023, the RMI signed a $2.3 billion Compact of Free Association renewal with the United States for another 20-year term extending through 2043. Under the Compact, the RMI receives nuclear-testing compensation, climate-adaptation support and other benefits, and also hosts ongoing U.S. defense installations that have become critical sites for long- range ballistic-missile testing, missile-intercept development, radar operations, satellite tracking and deep-space surveillance.
Today, the United States military remains one of the largest formal employers in the RMI. The U.S. has long-term land-use rights on Kwajalein Atoll, which is home to U.S. Army Garrison–Kwajalein Atoll and the Ronald Reagan Ballistic Missile Defense Test Site. These agreements extend through 2066, with an option for renewal through 2086, and provide a series of stable and predictable ongoing economic arrangements.
Grants, contributions and support from these arrangements have been used to create the long-term Compact Trust Fund for the People of the Republic of the Marshall Islands. Investments in this fund began over two decades ago and have been growing at an annual rate of roughly 6.9 percent since 2004, alongside additional contributions.
Shared Prosperity
ENRA (Universal Basic Income)
ENRA – the RMI’s Universal Basic Income – is a way to ensure the national wealth earned through this fund regularly reaches and benefits every citizen of the RMI, providing support to overcome historical and structural barriers that have impacted the fabric of the nation
Universal Basic Income has been approved by the RMI’s national legislature and is embedded in the country’s fiscal architecture. The sovereign wealth fund has been structured so that a limited percentage of its annual investment returns can make regular Universal Basic Income distributions permanently sustainable.
Distributions are intended to be universal and nationwide within the citizen-resident population, unconditional in terms of income or employment, and regular – beginning at the end of 2025 and continuing on a quarterly basis for the next decade or longer. A companion program for higher-need communities, called the Extraordinary Needs Distribution (END), is earmarked for atolls and islands facing exceptional hardship, including support for food, housing repair and other needs from outer islands affected by nuclear testing.
UBI funding is sourced from the interest generated by the Compact Trust Fund within a sustainable four- percent cap, and has been approved by a Trust Fund Committee whose members include both RMI and U.S. representatives. All disbursements occur under external oversight and are aligned with long-term fiscal sustainability.