Central Bank of the Bahamas looking to launch Sand Dollar CBDC
Updated: Oct 26, 2020
In what could end up being a world first, the Central Bank of the Bahamas appears set to move ahead with the nationwide launch of its central bank digital currency (CBDC), the “Sand dollar” in October 2020.
After announcing its technology partners in March 2019, then piloting the Sand Dollar and accompanying digital wallets on the islands of Exuma and Abaco in December last year, this CBDC rollout has been in the pipeline for a while. On release, the central bank will reportedly release approximately USD$48,000 worth of the Sand Dollar into circulation, valued at 1-1 with the regular Bahamian dollar (BSD), which in turn is pegged to the U.S dollar. This offshoot of the Bahamian dollar will be accessible via a mobile-based wallet app due to be released simultaneously.
The Bahamian government is quick to dismiss views that it’s opening up a crypto wild west in the archipelago nation of roughly 400,000 people. As demand increases, the central bank insists it will only “mint” more Sand Dollars when physical BSD is removed from circulation, preventing any kind of monetary inflation. In comments to local media, central bank governor John Rolle reportedly said:
We are doing the work behind the scenes to complete the integration of the infrastructure with the rest of the banking system, in terms of connectivity with deposit accounts, and there is also focus on addressing the assessment of the security of the infrastructure in terms of the resilience of the infrastructure against cyber attacks and other mishaps... Once that work is concluded we will have most of the assurances we need to make the currency available to the wider public.
According to Chaozhen Chen, the central bank's assistant manager of eSolutions, the idea of the state backed e-currency was coined to provide the nation's people with better access to financial services. Seeing as the Bahamas are a set of islands, having a digital currency with a mobile wallet could provide a much better service to their people than having brick and mortar banks in each location that services are demanded. This is consistent with earlier comments by Deputy Prime Minister and Minister of Finance of the Bahamas, K Peter Turnquest at the Bahamas Blockchain and Cryptocurrency Conference in 2018, where he said:
A digital Bahamian currency is especially important for the many family islands as they have seen many commercial banks downsize and pull out of their communities, leaving them without banking services. As an island nation, where transportation can be an inconvenience for many, especially the elderly, and costly, we must offer financial services digitally and securely.
This motivation for improved access highlights how the Bahamas' new form of digital currency is far removed from its better-known crypto counterparts, such as Bitcoin and Ethereum, which are valued for their anonymity.