IMF warns the Marshall Islands against launching its own cryptocurrency

11 Sep, 2018
by Richard Allen
News
IMF warns the Marshall Islands against launching its own cryptocurrency

The International Monetary Fund (IMF) has issued a stark warning to the Marshall Islands: if you launch your own cryptocurrency you will be denied international aid.

Recap: Marshall Islands may become first sovereign state to make crypto its legal tender

According to CoinDesk, the IMF released a report on Monday detailing why it would be risky for the Marshall Islands to issue its own cryptocurrency. According to the report, the remote chain of islands has become “highly dependent” on external aid in the form of the US dollar as the country faces constant natural disasters brought about by climate change.

“The issuance of a decentralized digital currency as a second legal tender would increase macroeconomic and financial integrity risks, and elevate the risk of losing the last U.S. dollar correspondent banking relationship with a US-based bank," the report read, which would alienate the country’s only domestic commercial bank.

"In the absence of adequate risk mitigating measures, the issuance of a decentralized digital currency as a second legal tender would not only increase macroeconomic and financial integrity risks but elevate the risk of losing the last U.S. dollar CBR," the report continued.

Cryptocurrencies have often been used as a method of protection against economic instability. Venezuela has recently incorporated digital tokens into its economy as a means to fight against the rampant hyperinflation currently grippingthe country.

Read more: Petro cryptocurrency to become Venezuela's second official currency

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