The Bahamas plans to implement regulations forcing commercial banks to support its Sand Dollar central bank digital currency (CBDC) within the next two years, according to a Reuters report. The Central Bank of Bahamas launched the CBDC in late 2020. More than three years on, just B$2.5 million was in circulation by March of this year. That’s considerably less than one percent of the total cash in circulation. The Bahamian dollar is pegged to the U.S. dollar.
“We foresee a process where all of the commercial banks will eventually be in that space and they will be required to provide their clients with access to the central bank digital currency,” Governor John Rolle told Reuters. However, users can top up third party wallets from their bank accounts.
While the CBDC may lack widespread bank offerings, there were seven active digital wallet providers by the end of last year. At one point, there were concerns that the multiple available wallets were confusing users.
Apart from the lack of integration with banks, there’s also a need to expand retail outlets with almost 1,800 supporting the CBDC at the end of 2023. However, growth is slow with the number of consumer and merchant wallets growing by around 1% monthly at the end of last year. Monthly transaction volumes during 2023 were around B$25,000 according to the IMF.
Earlier this year the central bank highlighted some challenges it has faced in rolling out the CBDC, including wallet confusion and the slow growth of merchant wallets. Users can top up their wallets using cash at automated kiosks, but there’s a need for education around the topic. Plus, the Bahamas has encountered infrastructure issues with patchy telecoms reception. Hence, it’s making an offline CBDC available.
Meanwhile, the central bank partnered with NZIA, now rebranded as Movmint which deployed a private DLT for the Sand Dollar.
