The Bahamas is set to expand access to its Central Bank Digital Currency (CBDC) known as the “Sand Dollar” by involving commercial banks, as stated by the country’s central bank governor. John Rolle, the Governor of the Central Bank of The Bahamas, outlined the plan to establish regulations within the next two years. The country has already begun signaling its intentions to banks, with the aim of having all commercial banks offer their clients access to the CBDC in the near future.
While the Central Bank of The Bahamas views this move as crucial for boosting CBDC and mobile payment adoption rates, commercial banks will face significant challenges in modifying their existing IT systems to comply with the upcoming requirements. Despite the efforts to incentivize the use of the Sand Dollar since its launch in 2020, adoption rates remain low. This has prompted a shift from incentives to enforcement, according to Rolle.
Statistics indicate that the Sand Dollar currently accounts for less than 1% of the country’s currency in circulation. Data from the central bank shows a decrease in wallet top-ups from $49.8 million to $12 million within an eight-month period. While there are 120,000 mobile wallets in existence, representing 20% of retail bank accounts, they contribute less than 1% to retail payments. Rolle highlighted the discrepancy between widespread use and low average transaction value in a recent interview.
Despite the challenges, there have been positive developments in the short term. The Central Bank of The Bahamas reported modest seasonal growth in digital payments activities, including the use of the Sand Dollar. Person-to-business (P2B) and business-to-business (B2B) transactions involving the CBDC doubled from November 2022 to reach $4.5 million. Moreover, the number of personal wallets increased by 20% in December 2023, while the Sand Dollars in circulation rose by 60.8% to $1.7 million.
The mandatory adoption policies being implemented in The Bahamas could serve as a model for other jurisdictions looking to promote the use of CBDCs. The European Central Bank, for instance, is considering similar requirements for retail and commercial banks in the event of a digital euro launch. This trend suggests a broader shift towards central bank-issued digital currencies around the world.