The IMF recommended that 'Make the virtual currency a legal currency' on the Marshall Islands
In February 2018, a bill was passed in the Marshall Islands Republic , a small country floating on the Pacific Ocean, "to make the world's first government-issued virtual currency" Sovereign (Sovereign) "a legal currency. However, the International Monetary Fund (IMF) has developed into a situation proposing "the virtual currency should be a legal currency should be reconsidered" for the announcement of the Republic of Marshall Islands.
Republic of the Marshall Islands: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of the Marshall Islands
Marshall Islands warned against adopting digital currency - BBC News
IMF Advises Against Crypto as Legal Tender in Marshall Islands Report - CoinDesk
In the Republic of Marshall Islands so far, we used US dollars as our currency. The Republic of Marshall Islands receives foreign aid of US $ 60 million (about 6.6 billion yen) annually from the United States, but there is also concern that financial dependence on the United States is too strong, "The step to get freedom as a state "It is said that it decided to issue the local currency as the currency.
Sovereign was developed by Israeli start-up company Neema , and information required by financial institutions such as holders of virtual currency and financial resources is also secured within the virtual currency. The Marshall Islands republic planned to issue sovereigns through Initial coin offering (ICO) in the latter half of 2018, but the IMF stated that "the potential benefit of using the virtual currency as a legal currency depends on the economy, reputation, It is less than the risk, "announced a report showing the disappointing decision of the Republic of Marshall Islands.
"The authorities of the Republic of Marshall Islands should seriously rethink the decision to make the virtual currency the legal currency," the IMF asserted. There is only one commercial bank in the Republic of Marshall Islands, there is a risk that connection with the American bank will be cut off due to issuance of the virtual currency.
by Stefan Lins
In addition, the IMF emphasizes that the Marshall Islands, which is a small island country on the Pacific Ocean, is susceptible to climate change, has many natural disasters and requires foreign aid. The Republic of Marshall Islands is dealing with both US dollar and sovereign as legal tender currency but it is said that the problem of financial soundness arising from the introduction of sovereign and the worsening of relations with American banks is not an acceptable risk IMF Said. In the report, the IMF says, "In the worst case, it is possible to assume that aid to the Republic of Marshall Islands will be terminated."
While concerns about worsening relations with foreign countries due to the introduction of virtual currencies are concerned, "Banks are concerned that virtual currencies are" crime and unlawful use, "they are concerned with block chain experts A David Gallard is analyzing. According to Mr. Gallard, the bank thinks that the virtual currency will be used for criminal acts such as money laundering .
A major bank has such doubts because the virtual currency can interact very smoothly over the network. The IMF also points out that the Republic of Marshall Islands should take countermeasures against money laundering and counterterrorism when introducing sovereigns and lead to a worsening relationship with American banks if such measures are not taken. Mr. Gallard said, "The IMF's recommendations clarify possible risks when the Marshall Islands Republic introduces sovereigns, so it would be possible for foreign major banks to rethink their relationship with the Marshall Islands Republic" I said.