Bahamas rolls out sovereign digital currency

The Bahamas’ central bank digital currency (CBDC), the Sand Dollar, has been made available to all residents of the archipelago. The launch took place on 20 October at approximately 22:00 UTC.

The country is the first in the world to implement a digital currency at the state level. The Sand Dollar’s value is pegged to the Bahamian dollar, which in turn is pegged to the US dollar.

The coin can be used via mobile phones, which are in the hands of 90% of the archipelago’s residents. To do so, a central bank–approved digital wallet must be installed on the device.

In the list of financial institutions operating with Sand Dollar, joined one commercial bank, three payment-service providers and four money-transfer systems.

The CBDC is accepted at any shopping centre, and the transaction fee is ‘negligible’, according to the project site.

The regulator’s technology-solutions provider is NZIA.

The project does not envisage anonymity for CBDC users, but adheres strictly to privacy and data-protection rules.

The regulator plans to issue new tokens as demand grows, while gradually withdrawing fiat dollars to maintain balance in the market.

Plans to issue the digital currency have been under discussion since June 2018; at that time, Finance Minister Peter Turnquest emphasised the importance of developing a new digital payments service for small islands because of the shrinking presence of commercial banks.

Testing of the CBDC began in December 2019.

In April 2020, on the central bank’s balance sheet stood $48,000 of Sand Dollar coins. They were issued as part of a pilot project.

Going forward, the regulator plans to use the CBDC outside the country. For this, the coin must be compatible with other global currencies.

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