Marshall Islands Warned Against Adopting Digital Currency (bbc.com)

The International Monetary Fund (IMF) is warning the Republic of the Marshall Islands to "seriously reconsider" the idea of adopting a digital currency as a second form of legal tender. As it stands, the U.S. dollar is the only legal tender in the islands. The BBC reports: A law to adopt a digital currency named "Sovereign" alongside the dollar was passed in February. The first virtual coins are due to be issued to members of the public via an initial coin offering (ICO) later this year. However, IMF directors said the potential benefits of the move were much smaller than the potential costs of "economic, reputational and governance risks." "[Marshall Island] authorities should seriously reconsider the issuance of the digital currency as legal tender," wrote the directors in their report, which was first spotted by Coindesk.

There is just one domestic commercial bank in the country and it is at risk of losing its only correspondent banking relationship with another bank in the U.S. That relationship allows the Islands to transfer dollars in and out of the country. It highlighted the Marshall Islands' dependence on foreign aid, and the fact that the country is vulnerable to natural disasters as well as sea level rise linked to climate change. Adopting a digital currency as an official form of legal tender would threaten both financial integrity and the nation's key relationship with the U.S. bank. The result could be disruption to foreign aid, according to the IMF.

Comments

$5 Wrench

[weilawei]

"It'd be a shame if anything happened to your island."

Re:$5 Wrench

[Moblaster]

Someone at IMF must be scared of cryptos. Little old Marshall Islands with 50K population is that scary?

Re:$5 Wrench

[IcyWolfy]

It would mean that the argument that cryptocurrency is a commodity will no longer be blindly valid, as the only arguments currently remaining against declaring it a currency equivalent, is that cryptocurrency is not recogninzed by any state as a currency, is not issued by any central bank, nor is in common use as a currency in any locale. This will break those remaining arguments.

And then, I can see people in the US suing the IRS to reclassify cryptocurrencies as a currency, and not as property.

Re:$5 Wrench

[ShanghaiBill]

"It'd be a shame if anything happened to your island."

Something already happened. America vaporized one of their islands.

Re:$5 Wrench

[N1AK]

Have you got any evidence to suggest the IMF is worried about Crypto, beside some half baked conspiracy, rather than genuinely believing that banks might be spooked and that causing problems for the islands? If your a bank and your asked to give someone a loan you make assessments about their ability to pay. If their ability to pay is heavily dependant on a minor crypto-currencies value this is likely to be seen as added risk. Add in the fact banks like keeping crypto at a distance because of all the money laundering etc regulations they are obligated to consider (and the difficulty of doing that with crypto) and I think it's a perfectly reasonable warning.

If you control the currency...

[snemiro]

you control the country..... Bankers don't like the idea of a gov't managed currency... https://en.wikipedia.org/wiki/...

There's another possibility

[hyades1]

Since the Marshall Islands obviously don't like being under the thumb of corporate-owned America, perhaps they should consider another option. No doubt China would love to see the yuan adopted by the Marshall Islands as its primary form of legal tender.

Being attached so closely to the Chinese would have its own downside, of course, but given the current course of the United States, the choice isn't nearly as clear as it once was.

Making a mountain out of a molehill

[Gravis Zero]

If you a wondering where, who and what, here's info about the Marshall Islands.
They have a population of about 53K people, so if it all goes wrong, it's not going to be a huge crisis for the world.

Besides, they have very real health problems that they should focus on:

A 2007–2008 study revealed that the rate of type 2 diabetes is among the highest in the world; 28% over the age of 15; 50% over 35. Approximately 75% of women, and 50% of men are overweight or obese. This is mostly due to the adoption of an unhealthy diet and lack of exercise. About 50% of all surgeries performed on the island are amputations due to complications from diabetes. There are no facilities for renal dialysis.[39]

On the other hand, if you are a "chubby chaser" or you are into "nub love" then I think you just found your paradise. ;)

Bailouts is why IMF exists

[ghoul]

IMF was created to do bailouts. If economies dont collapse IMF officials are out of a job. World Bank was created to give uneconomic loans to economies which were not sufficiently subservient to US corporate interests. Once those loans create a debt crisis, IMFs job is to come in and do a bailout and seize control of the countries economic policy and modify it to be friendly to US corporate interests.
After WW2 US had 2 choices on how to rule a worldwide empire
1) Absorb all conquered territories as US states, give people a vote and equal rights as Americans
2) Do not absorb anyone, instead impose the Bretton Woods system so that the US gets all the economic benefits of having a worldwide colonial empire without having to deal with the costs.

Guess what the US chose?

Democracy from 30000 feet

[ghoul]

is only sent to countries with oil.