The Central Bank of Bahamas prepares for the National Release of Central Bank Digital Currency

The Central Bank of the Bahamas is preparing for a nationwide rollout of its digital currency, known as “Project Sand Dollar”. The central bank digital currency (CBDC) had been trialled in two regions of the Bahamas, Exuma an Abaco. The gradual national release of the CBDC will commence on October 20th, 2020 through authorised financial institutions (AFIs). These institutions include commercial banks, credit unions, money transmission businesses (MTBs) and payment service providers (PSPs). Project Sand Dollar is a continuation of The Bahamas’ Payments Systems Modernization Initiative (PSMI), which was initiated in the early 2000s.

According to the Central Bank of the Bahamas, “the intended outcome of Project Sand Dollar is that all residents in The Bahamas would have use of a central bank digital currency, on a modernized technology platform, with an experience and convenience, legally and otherwise, that resembles cash”. A reduction in service delivery costs, enhanced transactional efficiency, and an increased level of financial inclusion are expected from its application. The Central Bank emphasised the importance of this initiative as there are segments of the Bahamian population that are excluded from access to financial services pockets due to the remote location of several communities and the absence of physical banking services. Better access to payment services would provide the necessary channel for making other financial services more accessible for such communities. The Central Bank further noted that “this strategy would also rely on sustained financial literacy campaigns to boost product awareness and encourage more positive behaviour around personal finances”.

Project Sand Dollar will be rolled out in two phases. The first phase will target the private sector by having the CBDC ready for immediate use along three different levels of accounts and subject to know-your-customer (KYC) and customer due diligence measures (CDD) measures. The second phase will focus on Government services and public utilities, extending into the first and second quarters of 2021.

The public update on the Project Sand Dollar initiative can be read here.