Petro is a state-backed cryptocurrency that has been introduced by Venezuela. To save the falling economy from further downfall and to help its people, Petro was invented.
But the idea of making a cryptocurrency, an official currency of a country appears to be vague as a maximum number of countries fail to have regulatory power over the number of digital money.
With 1000 small islands that are situated in the Pacific Ocean, the Marshall Islands thought to come up with a state-backed cryptocurrency.
IMF to Warn Versus State-Backed Cryptocurrency
But according to International Monetary Funds, they must reject the idea of releasing its very own cryptocurrency. Back in February, the law that has been adopted clearly said that Sovereign will be their state-backed cryptocurrency.
However, here lies the problem. The ICO is expected to occur at any point of time of this year but the IMF is firm with their suggestions that Marshall Islands must cancel their plans of proceeding with it in future. As the relation between the Island’s commercial bank and one of US’s bank is not good, it may pose as an issue in this process.
The tokens being liquid and not so regulated, it may be used for various illegal purposes apart from numerous other activities. Thus, these issues may distress the US banks from whom the Marshall Islands take services.
Further, as the press claims, the introduction of this state-backed digital currency will cause serious harm to the relationship and will do no good for the future. Located in the Pacific region, the natural disasters are very common in this area. Thus, a second currency can affect the economy greatly.
Plus, IMF thinks that the costs involving the introduction of the Sovereign will be much high when compared to the benefits of its release.