Virtual currencies are gaining the wider recognition of more countries around the world. From year to year, more governments are considering creating their own currency, which would act as a means of payment. Such virtual money is not only a very convenient solution for users but also increases the stability of the country.
From year to year, more governments are considering creating their own currency, which would act as a means of payment
The small Pacific state on February 26, 2018 passed a law introducing its own cryptocurrency. The goal was to create and broadcast a digital, decentralized currency based on blockchain technology, which is also a legitimate state-of-the-art means of payment. The currency named Sovereign will be issued in the amount of 24 million units, and the rigidly fixed number will serve to limit inflation. The so-called SOV will be put into circulation by the ICO system (Initial-Coin-Offering).
– Although the Marshall Islands have only 53 thousand residents, banks and credit companies must react to this change. 24 million tokens correspond to 24 inhabited islands or country atolls. As you know, so far all institutions of this type were strongly opposed to digital currencies. However, since Sovereign was introduced by the government and not a private company, it has a legal basis, and the financial sector will have to accept digital payments. This situation will certainly help to take a big step towards the global adoption of digital currencies, and for the Marshall Islands this is another step in manifesting their national freedom.
The Marshall Islands are not the only country that has decided to do so. Venezuela also managed to introduce its own virtual currency, called Petro, despite the great economic crisis. This currency is to be the basic unit of account for the oil industry, and it is also considered paying wages to employees.
– With the debut of Petro, a new Bolivar, called the „Sovereign Bolivar”, was created by denomination and is linked by course to the Venezuelan cryptocurrency. As a result, the government wanted to harness the hyperinflation that hit the country after the fall in oil prices on international markets and regain the country’s economic stability. Unfortunately, these plans failed, we will see what the future will bring. In addition, settlements with Petro are to allow international sanctions imposed on the country by the United States. Importantly, in a short time Petro collected very large funds during the pre-sale of currencies to investors – from February 20 to March 19, 2018, USD 735 million were raised. Thanks to this event, Petro was in the third place of the largest sales of Blockchain tokens in the world (the 3rd largest ICO project). Despite this success, I am very skeptical about this cryptocurrency because it is issued by a government that is completely unreliable, and the credibility and transparency in the virtual currency industry is crucial – adds Gancarz.
From February 4 this year in Venezuela, the legal framework governing the cryptocurrency market has become applicable. Law enforcement will be dealt with by Sunacrip, who is the regulator of all activities related to virtual currencies in Venezuela.
United Arab Emirates
At the beginning of this year, United Arab Emirates and Saudi Arabia announced the desire to create a virtual currency, which starts with the creation of an Executive Saudi-Arab Coordination Council.
– The alliance of these two countries is one of the strongest economic alliances in the world. Their combined state property funds occupy the second place in the world. Both countries are also eighth in the world in terms of exports of goods and services according to World Bank data. Market capitalization of listed companies in both countries is 17th in the world, and both countries have oil reserves accounting for about a quarter of global resources. No wonder that they finally decided to create their own virtual currency. In this country, the Central Bank wants to create a cross-border currency, which, however, will not be available to retail customers. The virtual currency is based on the use of a distributed database that will provide transparency for system participants, i.e. for central banks and commercial banks in these countries
The cross-border digital currency is to be strictly targeted at banks in the experimental phase in order to better understand the impact of Blockchain technology and to facilitate cross-border payments. The entire project will determine the effect of the central currency on monetary policy.