The Central Bank Of The Bahamas will introduce a digital version of the Bahamian dollar, with the pilot starting almost immediately.
The proposed central bank digital currency (CBDC) has been dubbed the ‘Sand Dollar’ by officials and the initiative as a whole is ‘Project Sand Dollar’.
It will launch in the Exuma region this month and extend to the Abaco area in the first half of 2020.
A statement says this is a continuation of the Bahamian Payments System Modernization Initiative (PSMI).
The scheme, which began in the early 2000s, aims to improve for financial inclusion and access for the nation’s unbanked.
A central bank spokesperson said: “Although average measures of financial development and access in The Bahamas are high by international standards, pockets of the population are excluded because of the remoteness of some communities outside of the cost effective reach of physical banking services.
“More onerous customer due diligence standards for AML/CFT international tax compliance have also resulted in forms of exclusion, including more recent responses to tighter “know your customer” (KYC) systems introduced to preserve international correspondent banking relationships.
— John Rolle (@GovernorCBOB) December 20, 2019
“As recent policy and regulatory reforms have begun to tackle these barriers, the Central Bank is intent on accelerating payments system reform, admitting new categories of financial services providers and using the digital payments infrastructure to make the supply of traditional banking services accessible to all segments of the population.”
The Bahamas has a high penetration of mobile phone usage, and a likelihood that a higher share of the population would be willing to use digital financial services including electronic payments, the statement adds.
But officials admit more work needs to be done to educate around the safety of conducting online transactions.
“Most of the benefits of introducing a digital currency are still unquantifiable,” the spokesperson added.
“However, they include a potential suppression of economic costs associated with cash usage, and benefits to the Government from improved expenditure and tax administration systems.”