The Bahamas Are Planning to Launch a Central Bank Digital Currency

It seems that, at this time, the most popular trend in the crypto space is that of central bank digital currencies (CBDC). Over the last couple of months, numerous countries have announced plans to create their very own national cryptocurrencies, in an effort to increase the percentage of cashless payments, while also providing citizens and businesses with a quicker and cheaper way of transferring funds.

The Central Bank of the Bahamas represents the latest financial institution to announce plans of developing a CBDC. Some of the arguments promoting the development of the CBDC include the very high popularity of cash and cheque-based payment methods, despite the availability of alternatives.

Dubbed as Project Sand Dollar, the pilot program for the CBDC will be built on-top of a public blockchain. According to the country’s central bank, "The Central Bank expects that at the conclusion of this project all residents in The Bahamas will have equal, expanded access to modernised digital payments capabilities. A concurrent reduction in cash transactions is also expected. The evolved Bahamian payments infrastructure should reduce service delivery costs, increase transactional efficiency and improve the overall level of financial inclusion in communities throughout the archipelago."

Reports indicate that the CBDC will be initially focused on the family of islands surrounding the Bahamian territory, where citizens have limited access to banking services. Due to Bahamas’ laws, the on-going anti-money laundering efforts, and cost-reducing campaigns, banks find it more difficult than ever to open up and maintain branches in the Bahamas.

The Bahamas Central Bank has announced that they will collaborate with NZIA.io, a transaction service provider, and Zynesis, which is a blockchain software development company. So far, no agreement concerning the final terms of the collaboration has been reached.

When asked whether the Sand Dollar will be compliant with national and international regulations, the central bank stated that the cryptocurrency will respect all financial laws, including the Bahamas Financial Bill of 2019. In other words, the digital currency will respect all regulations concerning illegal activities, such as terrorism financing or money laundering. This means that it won’t be a semi-anonymous coin, like Bitcoin and other similar cryptocurrencies.

The first reports concerning the Bahamas’ cryptocurrency were made in 2018. If development goes as planned, chances are that the CBDC will have its release date set sometime in late-2020.