Various banks show an interest in issuing their own native currency. Projects like these are often referred to as a central bank digital currency
The Bahamas may become one of the regions to receive such a currency. It will be issued by the country’s central bank throughout the first half of 2020.
Rumors regarding a Bahamian CBDC have persisted for some time. A pilot project was created in late 2019.
The region of Exuma is currently experimenting with the “Sand Dollar”. It is expected that this currency will also make its way to Abaco throughout the first half of 2020.
Another Central Bank Digital Currency Project
It appears this central bank digital currency will effectively go by the name of Sand Dollar. It is part of the Bahamian Payments System Modernization Initiative. That process is ongoing for over 15 years now.
As part of this initiative, the government wants to boost financial inclusion in the region. Moreover, the Bahamas want to streamline domestic payments across the board.
Parts of the local population remain excluded from common financial services and products. This is primarily due to living in remote regions. Those areas affect the cost-effectiveness of physical banking services.
Focusing on digital services, such as a CBDC, is the best option. The Sand Dollar will still adhere to strict AML, CFT, and KYC requirements. Lowering the barriers to entry for financial services is part of the recent policy and regulatory reforms in the country.
The Bahamian Central Bank also wants to accelerate its payment system reform. This will include adding new categories of financial service providers to the fray. A strong focus will also be put on digital payments and the associated infrastructure.
Other benefits can be introduced by this central bank digital currency as well. These include raising awareness of financial products and prioritize responsible behavior. Given the current rate of mobile device adoption, this Sand Dollar can be of great value in that regard as well.
To accommodate the central bank digital currency, new regulatory measures need to be introduced. The Central bank of the Bahamas is already pursuing this aspect. Its focus lies with data protection standards and consumer protection.