IMF Expresses Concern About Marshall Islands Sovereign Cryptocurrency as Legal Tender
IMF Opposes The Use Of Virtual Assets As Authorized Tender In Marshall Islands Report
The global financial watchdog, International Monetary Fund (IMF) is advising against the use of crypto another authorized tender together with the United States dollar in the Republic of the Marshall’s Islands.
The country, which is an isolated series of islands located far away in the Pacific, recently approved a law that aimed at introducing a ‘Sovereign’ virtual asset in order to give the local economic structure a shot in the arm. By introducing a crypto, the nation also aimed at circumventing the rising risks of becoming cut off from the international fiscal system.
However, as a result of the consultations with the Island’s representatives, the IMF issued a document on Monday, which strongly advised against the use of virtual asset as a legal tender. The report indicates that the nation is currently very much reliant on outside fiscal assistance. This is majorly due to the fact that the nation has faced challenges resulting from climate change as well as natural catastrophes.
The only local commercial fiscal institution in the nation is facing risks of doing without the US dollar correspondent fiscal association (CBR), with a financial institution which is based in the United States. This is as a result of the stringent due diligence that fiscal institutions undergo in the United States.
According to the IMF, the advent of a virtual asset as a legal tender is likely to flop. This will be the case unless the lack of wide-ranging anti-money laundering procedures may result in the US financial institution cutting links with the nation.
The IMF continues to assert that due to the lack of sufficient risk mitigation procedures, the issuing of the virtual asset as another legal tender may only result in an increase in macroeconomic and fiscal integrity risks. This is in addition to the risk of doing without the last US dollar CBR.
The IMF also argues that digital currencies threatens the demand for fiat currencies. In this regard, the nation’s Central Bank needs to up their game, by embracing appropriate structures of cryptos to be in a better position to contend with the innovative technology.