The Bahamas is all set to become the first country in the world to roll-out a state-backed virtual currency nationwide and has announced it will launch a central bank-issued cryptocurrency during October. Chaozhen Chen, the assistant manager of eSolutions at the Central Bank of The Bahamas, told Bloomberg that the digital currency, dubbed ‘Sand Dollars,’ is intended to drive greater financial inclusion remote islands within the archipelago nation. Sand Dollar transfers are made using a mobile phone, with roughly 90% of the Bahamian population using mobile phones as of 2017.
A lot of residents in remote islands don’t have access to banking infrastructure.
“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,” Chaozhen Chen noted. Chen further noted that the central bank digital currency (CBDC) would be subject to the same regulations as the Bahama dollar, with anti-money laundering and know-your-customer protections surrounding the creation of accounts to use the virtual currency.
New digital dollars will be created as demand grows, with the CBDC exclusively issued alongside the retirement of Bahamian dollars to mitigate potential impacts on monetary supply.
Central banks across countries continue to explore CBDCs.
Developed countries, including the USA and China, are exploring central bank digital currencies in the age of innovation. As reported earlier, the Bank for International Settlements revealed that in 2020, worldwide internet searches for CBDCs surpassed searches for Bitcoin and Facebook’s Libra. The People’s Bank of China (PBoC) is currently conducting trials of its national digital currency, dubbed DCEP, in several cities and is all set to launch soon. The PBoC had earlier mentioned that it was only testing the digital yuan for small retail transactions.