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The Bahamas Central Bank Digital Currency Will Be Rolled Out in October

The race to be the first country with a working central bank digital currency (CBDC) has been in full swing, but while all eyes have been on the United States and China—the Bahamas has just announced its own state-backed virtual currency will be ready by October.

The Bahamas will be ready to roll out working CBDC by next month, and while it will not have quite the same implications as a Digital Yuan or Digital Dollar for the global economy—the Sands Dollars will be the first state-backed virtual currency.

As reported by Bloomberg, the digital currency or ‘Sand Dollars’ aimed to create more financial inclusions among the many remote islands of the Bahamas.

Chaozhen Chen, Assistant Manager of eSolutions at the Central Bank of the Bahamas said:

“A lot of residents in those more remote islands don’t have access to digital payment infrastructure or banking infrastructure. We really had to customize the effort and the solution to what we need as a sovereign nation.”

Chen stated that the CBDC or Sands Dollars will fall under the same regulation as the Bahama dollar, and as such will be subject to the same anti-money laundering (AML) and know-your-customer (KYC) standards.

The Bahamas digital dollar project was first announced by the Central Bank of the Bahamas in June 2018 as many of the smaller and remote islands in the tropical archipelago are cut off from banking services.

The Project Sand Dollar pilot was launched by the government of the Bahamas last year and the digital currency was trialed on the smaller islands of Exuma and Abaco which have a combined population of fewer than 25,000 people. The pilot was hailed as a success as 48,000 Sand Dollars were issued, with each pegged to the Bahamian dollar—which is itself pegged to the United States dollar.

The Sand Dollars or central bank digital currency will be created to match demand—the digital state-backed virtual currency will be issued as physical Bahamian dollars are retired, to maintain control of the monetary supply.

Marshall Islands—No Central Bank, No Problem

As reported back in March 2020, the Republic of the Marshall Islands (RMI) has also revealed plans to have the world’s first sovereign digital currency, even specifying that it will be built using Algorand’s technology. But it won’t be a central bank digital currency, as RMI has no central bank.

Plans for the Marshallese Sovereign (SOV) were first announced in February 2018 following a vote by the nation’s parliament in favor of proceeding with the plan.

According to a government whitepaper released in September 2019, the RMI has accessed the world markets via the US dollar and has never attempted to develop and maintain its own national currency as the cost of running its own central bank would be too great for the small and remote nation.

According to the research, digital ledger technology has changed the cost-benefit equation. It allows the small countries to combine the best features of traditional government-issued currency and cryptocurrency “leapfrogging obsolete stages of monetary development.”

Bahamas Looks to Deploy its CBDC The Sand Dollar Across Borders

The Central Bank of the Bahamas (CBOB) has revealed an ambitious use case for its Central Bank Digital Currency (CBDC) ahead of the national roll-out on October 20. The CBDC has been dubbed the Sand Dollar.

Sand Dollar To Find Relevance Across Borders

Speaking at an organized virtual presentation by the Bahamas Chamber of Commerce and Employers’ Confederation for businesses ahead of the Sand Dollar rollout, CBOB’s Bobby Chen, assistant manager of electronic solutions said that plans are in place to aid the integration of the Sand Dollars with other global currencies.

Referring to the Sand Dollars, Chen noted:

“At the moment, it is currently only used in a domestic setting, but eventually we are working on a solution that will make it interoperable with other global currencies.”

Other emphases have also been pointed out to highlight the unique functionalities of the Sand Dollars which will aid it in its proposed proposition to permeate the Bahamian economy.

CBOB Head of Banking Cleopatra Davis said:

“Some of the central strategies around Sand Dollar is the API card-less onboarding. This became extremely important during the time of COVID-19 because we realized it’s not business as we know it prior to COVID-19. Mobility and face-to-face may not be as easily accessible […] through the API card-less onboarding you’re going to be able to have access to Sand Dollar without physically entering a business place to do so.”

In order to meet with the environmental hazards prevalent in the Bahamas including Hurricane Dorian, the Sand Dollars has also been designed to have offline functionalities.

Bahamas May Be The First to Launch a Legal Tender CBDC

Should the Central Bank of the Bahamas meet up with it’s scheduled plan to roll out the Sand Dollars this month, Bahamas will rank as the first country to launch a CBDC that can be categorized as a legal tender.

The Bank of Lithuania earlier launched a blockchain-based digital collector’s coin dubbed LBCoins as part of its test for its soon to be launched CBDC.

Philippines Central Bank To Research Further Before Launching its CBDC

The governor of the Philippines Central Bank, the Bangko Sentral ng Pilipinas (BSP), Benjamin Diokno has recommended further research with respect to the Philippine’s plans toward the development of a central bank digital currency dubbed the Digital Peso.

As reported by Business Inquirer on Oct 22, Governor Diokno gave his recommendation to research further following the report of the central bank in its preliminary CBDC study.

The central bank governor noted that the “The initiative is aimed at enabling the BSP to keep pace with, and to enhance its readiness to adjust and evolve amid rapid technological developments,” and from the current situation of events, he said that the development of a Digital Peso may not be actualized in his own tenure.

Nonetheless, Diokno stated that more research would be done in the main time to strengthen the current payment system while productive consultations will be pursued with other nation’s central banks particularly though who has advanced in their own CBDC research. In addition, Diokno weighed in on the longstanding debate of superiority between current digital currencies and a CBDC and he emphasized that a CBDC is superior as it would be backed by law as an alternative medium of exchange to the underlying fiat currency.

The BSP in expressing its interest to pilot a Digital Peso inaugurated a committee to understudy CBDCs based on technical feasibility and policy implications. While the committee’s work would be ongoing, the Phillipines central bank will be focusing on developing the human capital it needs through workshops as well as calls for technical assistance from the International Monetary Fund (IMF) amongst others.

As most nations are gearing up to debut a potential CBDC as a means to bolster or strengthen their payment system, a dire need to get the system right given each country’s challenges is pertinent. The Central Bank of the Bahamas, credited to be the first to launch a CBDC it dubbed The Sand Dollars noted that it has perfected the system to work offline in the advent of a natural disaster.