The Bahamas’ Central Bank announced earlier this week that it will introduce a digital version of the Bahamian dollar, starting with a pilot phase in Exuma later this month, and extending in the first half of 2020 to Abaco. According to the bank, this initiative has acquired the name Project Sand Dollar, with the sand dollar also being the name assigned to the proposed central bank digital currency (CBDC). This is reportedly a continuation of the Bahamian Payments System Modernization Initiative (PSMI), which began in the early 2000s.
“Recent surveys document that as part of a financial literacy campaign, there is room to improve both knowledge and awareness of financial products and responsible financial behavior. Opportunities also exist to reduce transaction costs for businesses and consumers. Feedback from Exuma, show a high penetration of mobile phone usage, and a likelihood that a higher share of the population would be willing to use digital financial services including electronic payments. The public though will need more assurances around the safety of conducting online transactions. The digital currency design and public education will tackle these issues.”
The Central Bank further noted that it will simultaneously promote the development of new regulations for the digital currency, and strengthen consumer protection, especially around data protection standards. The bank added:
“The bank will also advance reforms to permit direct participation of non-banks in the domestic payments system. Early passage of the new Central Bank of The Bahamas Bill will support the creation of some regulations, while additional reforms will be possible under the existing Payment Systems Act.”