The Marshall Islands has been warned by the International Monetary Fund against adopting a digital currency, or cryptocurrency, as a second form of legal tender.

Photo: Anjojo Kabua

In February, the Marshalls' parliament passed a law paving the way for the country to release its own cryptocurrency.

The digital currency named "Sovereign" would serve alongside the US dollar as legal tender in the country.

But the IMF says the Marshall Islands should "seriously reconsider".

IMF directors say the potential benefits of the digital currency move are much smaller than the potential costs of "economic, reputational and governance risks".

The first virtual coins are due to be issued to members of the public via an initial coin offering later this year.

- BBC