This past May, the Marshall Islands announced that it was planning to introduce a new national currency. As opposed to traditional fiat, however, with the U.S. dollar at its core, the nation’s new main cryptocurrency would be a digital currency. The plans have been met with considerable resistance by the international currency, and there are now concerns that the country may have to scrub the plans.
In September, the International Monetary Fund (IMF) warned against the move, pointing out that the newly-created “Sovereign” cryptocurrency wasn’t viable. It (erroneously) argued that cryptocurrency carried with it certain inherent risks that wasn’t found with fiat. It asserted that crypto is rife with examples of money laundering and financial integrity—traits that, of course, are never seen with fiat.
The organization also asserted that the country stood the risk of losing international business partners. In response to the country’s move in September, the IMF stated, “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 [cost-benefit ratio].”
This has many wondering if the Marshall Islands might reconsider its plans. Despite assertions to the contrary, the country might now be doing just that. This past week, threats to cut financial aid to the country have begun to surface and the president of the Marshall Islands, Dr. Hilda Cathy Heine, has come under political attack. Eight senators have already signed a motion of no confidence in an effort to remove Heine from power.
Of course, fiat pundits always resort to the same stale tactics when trying to denounce the benefits of cryptocurrencies. This, in spite of repeated evidence indicating that fiat is much more dangerous than crypto. In economist Richard Wright’s account of currencies, “Less Cash, Less Crime: Evidence from the Electronic Benefit Program,” he points out that physical money is much more likely to be used for criminal activity than electronic alternatives. He stated, “It has been long recognized that cash plays a critical role in fueling street crime due to its liquidity and transactional anonymity. In poor neighborhoods where street offenses are concentrated, a significant source of circulating cash stems from public assistance or welfare payments.”
The Marshall Islands needs to continue moving forward with its plan to build an economy around cryptocurrency. In doing so, it will not become a part of history; it will make history. As William Arthur Ward said, “Adversity causes some men to break; others to break records.”
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