With the inauguration of the Sand Dollar, the Bahamas has attained the position of being the first nation in the world to officially launch a central bank digital currency (CBDC).
The Central Bank of the Bahamas, who disclosed this milestone, noted that the digital currency is currently obtainable to all 393,000 dwellers of the tropical country.
— Central Bank Bahamas (@CentralbankBS1) October 20, 2020
The Bahamas inaugurated the CBDC to boost greater inclusive access to financial services for socio-economic groups and neighborhoods that have been historically underserved by the country’s financial institutions. The launch of the Sand Dollar was also done to lessen service delivery expenditures and stimulate transactional effectiveness for financial services.
It should be noted that there are areas in The Bahamas that do not physically have access to a banking institution, so the launch of this CBDC should boost financial inclusion.
Recall that the bank previously disclosed in September that it proposed to launch the e-currency this in October. This decision was made after pilot tests of the digital currency began back in 2019.
How the Sand Dollar works
Citizens of the Bahamas can make use of the digital currency at any dealer with an e-wallet on their mobile device, but this wallet has to be approved by the Central Bank of the Bahamas. However, it’s worth noting that there are minor trade charges.
Research by the World Bank in 2017 showed that nearly 90% of the country use mobile phones. This is the reason why Sand Dollar transfers are done by mobile phone.
The payments policy seeks at being extra secure than the existing system through the use of multi-factored authentication, enhanced KYC/AML standards, and encryption protocols of a high level.
The value of one Sand Dollar is fitted to the value of the Bahamian dollar, which is fitted to the value of the U.S. dollar.
Other CBDC projects
While the Central Bank of the Bahamas has successfully secured its place as the first country to launch a CBDC, it’s worth noting that central banks from other countries have been pushing for the launch of their own bank-issued digital currency.
Top on the list is the Chinese central bank, the People’s Bank of China (PBOC). The country recently unveiled a draft law aimed at providing regulatory framework and legitimacy for its soon-to-launch digital yuan.
According to her, the Central Bank of Russia is currently gathering public feedback on whether to issue a digital ruble. She adds, “If a decision is made on the feasibility of launching a digital ruble, we will prepare a full-fledged concept. Then, in our opinion, there must be a piloting phase for a limited number of users in order for everything to be worked out, so that we understand how it works.”
Furthermore, the central bank of the Philippines, Bangko Sentral ng Pilipinas, has also disclosed that it is watching the digital currency space and could consider launching a state-controlled digital currency.
However, Benjamin Diokno, governor of the Philippines’ central bank, has stated that the government won’t be issuing a central bank digital currency anytime soon. Meanwhile, the central bank of Canada has also refused to rule out the launch of its own CBDC.
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