Bahamas Ready to Introduce CBDC Within 2 Years

To expedite the adoption of the central bank digital currency (CBDC) known as the “sand dollar,” the Bahamas have announced a two-year plan to integrate the currency into the operations of commercial banks.
John Rol, the Managing Director of the Central Bank of the Bahamas, disclosed his intentions to create the necessary regulations to ensure that all commercial banks provide access to CBDC for their clients.
The central bank’s strategy includes transitioning from incentivizing to mandating the use of the sand dollar across all banking platforms. Commercial banks will need to modernize their information systems to meet the new requirements. These enhancements are crucial for expanding the use of CBDC and improving the country’s mobile payment systems. Despite expected technical challenges, this change is crucial for modernizing financial transactions and strengthening the digital economy infrastructure.
Despite efforts made, the adoption rate of the sand dollar remains low, accounting for less than 1% of the total money supply in the country. From August 2022 to August 2023, portfolio inflows have drastically decreased from $49.8 million to $12 million. This sharp decline has prompted the central bank to shift from a voluntary to a compulsory approach to integrate the digital currency.
The strategy of the Bahamas mirrors the global trend where central banks are pushing for the acceptance of digital currencies. For instance, the European Central Bank plans to compel retail and commercial banks to use the digital euro if introduced. Similarly, the Reserve Bank of India saw a decline in daily transactions of its digital currency after initial incentives were withdrawn, underscoring the challenges in sustaining organic demand for digital currencies.
The Central Bank of the Bahamas is focusing on regulatory measures rather than financial incentives to ensure widespread adoption of its CBDC. Drawing insights from international experiences, the Bahamas aim to develop a regulatory framework that ensures sustainable engagement with the sand dollar. This approach could serve as a model for global policies in the realm of digital currencies.