IMF advises against crypto as legal tender in Marshall islands

posted 5 months ago
The International Monetary Fund has advised against the Republic of the Marshall Islands' plan to introduce a digital currency as a second legal tender alongside the US dollar. The Marshall Islands – a remote chain of islands in the central Pacific – passed a law on the issue in February, aiming the planned the "Sovereign" cryptocurrency to boost the local economy and counter the increasing risks of the nation becoming disconnected from the global financial system.

However, following a period of consultation with officials from the islands, the IMF published a paper on Monday advising against the move. According to the paper, the Marshall Islands economy is now "highly dependent" on external aid, as the country faces constant climate change and natural disasters. The only domestic commercial bank in the country is now "at risk of losing its last US dollar correspondent banking relationship with a US-based bank," due to tightened due diligence across financial institutions in the U.S.
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