Effective as of December 27, 2019, the Bahamas went live with its central bank digital currency (“CBDC” ) platform, known as the Sand Dollar. It will undergo a pilot phase testing in Exuma, which will be extended in the first half of 2020 to Abaco. According to the outline published by the Central Bank of the Bahamas, the Sand Dollar is a digital fiat currency, not a cryptocurrency:
A digital fiat currency would not be a “crypto currency” in any sense resembling private instruments in existence. It would be an identifiable liability of the Central Bank of The Bahamas, equivalent in every respect to the paper currency. Its value would be the same as the existing currency. The digital currency would also not be a stable coin, or a parallel currency, in the sense that it would not derive any value separate from the external reserves backing afforded to the Central Bank’s demand liabilities.
The Central Bank of the Bahamas explained that, although average measures of financial development and access in the Bahamas are high by international standards, pockets of the population are excluded because of the remoteness of some communities outside of the cost effective reach of physical banking services. Also, more onerous customer due diligence standards for AML/CFT international tax compliance have resulted in forms of exclusion, including more recent responses to tighter “know your customer” systems introduced to preserve international correspondent banking relationships. As recent policy and regulatory reforms have begun to tackle these barriers, the Central Bank is intent on accelerating payments system reform, admitting new categories of financial services providers and using the digital payments infrastructure to make the supply of traditional banking services accessible to all segments of the population.
Of course, China has been in the news recently concerning the proposed launch of its own CBDC.
