The Bahamas will offer access to the central bank’s digital currency (CDBC), the ‘Sand Dollar’, through commercial banks to increase adoption, Reuters reported on July 1, citing the governor of the country’s central bank .
Central Bank of the Bahamas Governor John Rolle said the country plans to adopt the regulations within two years and has begun communicating its intention to banks.
Rolle said:
“We foresee a process where all commercial banks will eventually find themselves in that space and they will be required to provide their customers with access to the [CBDC].”
The Central Bank of the Bahamas reportedly sees the change as crucial to increasing the adoption rate of CBDC and mobile payments, even though banks will need to significantly adapt their existing IT systems to meet the upcoming obligations.
Rolle said uptake of the Sand Dollar remains limited years after its 2020 launch, requiring a shift from incentives to enforcement.
Adoption in question
Reuters described low adoption statistics amid the news. It reported that the CBDC represents less than 1% of the country’s currency in circulation.
Reuters said wallet top-ups fell to $12 million in the eight months before August 2023 from $49.8 million in the same period in 2022, based on central bank data.
Rolle previously described “broad usage, but very low average transaction value” in an interview with The New Times on June 19. He said there are 120,000 mobile wallets in existence, equivalent to 20% of retail bank accounts, but mobile wallets make up less than 1%. of retail payments.
Strong short-term data
A central bank press release from February described stronger short-term data. It acknowledged “modest seasonal growth in digital payments business,” including the Sand Dollar, even as lower government payments impacted this year’s overall trends.
The bank said person-to-business (P2B) and business-to-business (B2B) transactions reached a combined value of $4.5 million, mainly involving Sand Dollars, a doubling from November 2022. It number of personal wallets rose 20% year to date in December 2023. Sand dollars in circulation rose 60.8% to $1.7 million.
The Bahamas’ mandatory adoption policy could precede other strategies elsewhere. Reuters noted that the European Central Bank similarly plans to require individuals and banks to accept and offer any future digital euros if it goes ahead with it.