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An official press release published on September 10 reported The International Monetary Fund (IMF) has alerted the Republic of the Marshall Islands (RMI) with regards to the perils of adopting a cryptocurrency as a second legal tender.
According to the report, the U.S. based agency supported by the United Nations addresses the government of the Republic of the Marshall Islands, communicating the introduction of digital currency as an official form of legal tender will risk the country’s financial integrity, as well as relationships with foreign banks.
The statement communicates, embracing digital currency as a second official currency after the U.S. dollar, the Bank of Marshall Islands (BOMI) — the only local commercial bank of the country — will increase the risk of letting go of “the last U.S. dollar correspondent banking relationship (CBR)” as a result of increased diligence by banks in the U.S.
The IMF also said that the loss of important banking relationships could damage the country’s economy as the Marshall Islands are “highly dependent on receiving and spending U.S. grants,”
Furthermore, the IMF believes the costs of embracing cryptocurrencies, such as the expansion and implementation of anti-money laundering (AML) and counter financing of terrorism (CFT) policies, are “considerably smaller” than any potential financial gains
The IMF strongly advised the Marshallese authorities to reconsider issuing a digital currency until the government is able to supply and device “strong policy frameworks” in regards to economic, reputational, AML/CFT, and governance risks.
Early February 2018 The Republic of the Marshall Islands — with a population of roughly 53,000 — disclosed plans to create and introduce its own cryptocurrency dubbed the Sovereign (SOV). Officials then declared the Sovereign currency would be “another step of manifesting [their] national liberty.” The Sovereign is ready to be a substitute to the official currency of the U.S. dollar and is planned to be dispensed via Initial Coin Offering (ICO).
