The Bahamas is setting its path towards the primary country within the world to roll-out a state-backed virtual currency globally and has also announced that it’ll launch a central bank-issued cryptocurrency later in October.
Within a recent report with Bloomberg, the assistant manager of eSolutions at the Central Bank of Bahamas, Chaozhen Chen, revealed that the virtual asset referred ‘Sand Dollars’, is meant to drive greater financial inclusion among the remote islands within the archipelago nation.
“A lot of residents in those more remote islands don’t have access to virtual or banking payment infrastructure. We actually had to customize the efforts and therefore the solution to what we’d need as a sovereign nation.”
Sand Dollar transfers are made by mobiles, with roughly 90% of the Bahamian population employing mobile phones as of 2017.
Chen added that the CBDC [Central Bank Digital Currency] will be subjected to similar regulations as the Bahama dollar, with AML as well as KYC security surrounding the creation of accounts to use the digital currencies.
New digital dollars will be formed as the demand grows, with the CBDC exclusively issued alongside the retirement of Bahamian dollars to mitigate potential impacts on monetary regulatory supply.
The Central Bank of Bahamas primarily announced its desire to pilot a CBDC earlier in June 2018, adding that several smaller islands had seen “commercial banks downsize & even pull out of their communities, leaving them without banking services.”
The government launched the ‘Project Sand Dollar’ pilot last year, trialing its CBDC on small islands of Exuma and Abaco – representing populations of just around 7,314 & 17,224 respectively.
Technically, Each Sand Dollar is pegged to the Bahamian dollar, which is successively pegged to the USD. While only 48,000 Sand Dollars were issued within the pilot, the project was hailed as a hit.