Bahamas to Enforce Laws Mandating Commercial Bank Support for "Sand Dollar" CBDC
Summary:
The Central Bank of The Bahamas is set to demand commercial banks to back its "Sand Dollar" CBDC, aiming to boost its adoption which has been lower than expected. The legislation could be enforced within two years. Despite being the first country to introduce a CBDC in 2020, the Sand Dollar represents less than 1% of the country's currency, dropping from $49.8 million to $12 million between January and August in comparison to 2022. Similar adoption challenges are experienced by China and Nigeria with their respective CBDCs.
The Central Bank of the Bahamas is set to implement laws that will obligate commercial banks to facilitate the country's central bank digital currency (CBDC), known as the "Sand Dollar", in an attempt to enhance its acceptance. John Rolle, the head of the Central Bank of The Bahamas, conveyed this development in a report by Reuters on June 2nd. He noted that the initiative's adoption has not been as robust as they had hoped hence the move to get commercial banks legally involved in the distribution of the digital money. Rolle anticipates that within a span of two years, these regulations would take effect. According to him, all commercial banks should eventually provide their clients with access to the Sand Dollar.
The nation has, however, detected a sluggish embrace of the Sand Dollar. Despite its introduction in 2020, the digital currency represents less than 1% of the country’s currency. In a year on year comparison, the total amount of Sand Dollar wallet top-ups dropped drastically from $49.8 million to a mere $12 million between January and August. As a response, the government is pushing commercial banks to administer the Sand Dollar which will inevitably demand heavy technological restructuring for each bank. However, the general consensus of the Bahamas Central Bank is that promoting usage of the CBDC and generalized mobile payments are of utmost importance.
What the Bahamas is experiencing is not an isolated case. In fact, disappointing rates in the adoption of CBDCs are not uncommon. For instance, some Chinese government workers, who participated in a CBDC test run in May, preferred to exchange the digital “e-CNY” for regular cash due to restricted utility and surveillance concerns. Nigeria, the leading African country in initiating CBDCs, is grappling with a similar situation. Despite the many attempts to stimulate acceptance, uptake remains underwhelming, with less than 1% of Nigerian bank account holders holding the digital wallets, with fewer still actively using them on a weekly basis.
Ahead of the world in CBDC implementation, the Bahamas first issued 'Sand Dollar' to its entire population of 393,000 in October 2020.
Published At
7/2/2024 7:49:14 AM
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