The Bahamas is taking steps to boost the adoption of its central bank digital currency (CBDC), known as the “Sand Dollar.” According to reports from Reuters on July 1, the country’s central bank governor, John Rolle, announced plans to provide access to the Sand Dollar through commercial banks. This move is aimed at accelerating the usage of the CBDC among the general public.
Governor Rolle stated that the country is looking to establish the necessary regulations within the next two years. The Central Bank of The Bahamas has already started communication with commercial banks to signal its intention. The goal is to have all commercial banks offering access to the Sand Dollar to their clients in the near future.
Despite the potential benefits of the Sand Dollar, there are challenges that need to be addressed. One of the major hurdles is the need for significant modifications to existing IT systems by banks to align with the upcoming regulatory requirements. Governor Rolle highlighted the importance of shifting from incentives to enforcement to drive higher adoption rates of the CBDC.
Reports indicate that the uptake of the Sand Dollar has been relatively low since its launch in 2020. The CBDC currently accounts for less than 1% of the country’s currency in circulation. Data from the Central Bank shows a decline in wallet top-ups, with a decrease from $49.8 million to $12 million in the same period between 2022 and 2023. Despite having 120,000 mobile wallets, representing 20% of retail bank accounts, mobile wallet transactions make up less than 1% of retail payments.
While the adoption of the Sand Dollar has been slow, there have been some positive signs in the short term. Recent data from the Central Bank shows a modest increase in digital payments activity, including CBDC transactions. The number of person-to-business (P2B) and business-to-business (B2B) transactions involving the Sand Dollar doubled from November 2022 to December 2023, reaching a total of $4.5 million. Additionally, the circulation of Sand Dollars increased by 60.8% to $1.7 million.
The Bahamas’ efforts to promote the adoption of the Sand Dollar through commercial banks could set a precedent for other regions. Reuters highlighted the European Central Bank’s similar intentions to mandate retail and banks to accept and offer any future digital euro. With the implementation of supportive regulations and enforcement mechanisms, the Bahamas aims to accelerate the integration of the Sand Dollar into everyday financial transactions.
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