The Bahamian government is set to enact new laws mandating that commercial banks facilitate transactions with the nation’s “Sand Dollar” digital currency, aiming to enhance its utilization.
According to a June 2nd article by Reuters, John Rolle, the Governor of the Central Bank of The Bahamas, has indicated that the uptake of the CBDC has not met expectations. Consequently, commercial banks will soon be legally bound to offer the digital currency to their customers. Rolle anticipates that the regulations governing the CBDC will be implemented within the next couple of years.
Rolle envisions a future where “all of the commercial banks will eventually be in that space and they will be required to provide their clients with access to the central bank digital currency.”
The Central Bank of The Bahamas. Source: Sand Dollar
Since its launch in 2020, the Sand Dollar has seen a tepid response, with its circulation making up less than 1% of the total currency in the Bahamas. Additionally, the amount loaded onto Sand Dollar wallets has seen a significant decrease, dropping to a mere $12 million from January to August of the previous year, a stark contrast to the $49.8 million during the same period in 2022.
The mandate for commercial banks to integrate the Sand Dollar will necessitate substantial technological upgrades. Nonetheless, the Central Bank of The Bahamas emphasizes the importance of promoting the CBDC and mobile payments more generally.
The Bahamas is not alone in experiencing lower than anticipated adoption rates for its CBDC. Similar trends have been observed in other nations:
– The Banque de France and the Hong Kong Monetary Authority are exploring CBDCs and tokenization.
– In China, some participants in the CBDC pilot program expressed a preference for converting their digital “e-CNY” into traditional cash, citing limited use cases and privacy concerns.
– Nigeria, Africa’s CBDC frontrunner, has also struggled with adoption rates. As of mid-2023, less than 1% of Nigerian bank account holders possessed eNaira wallets, with fewer than 1.5% of these wallets being actively used on a weekly basis.
The Bahamas holds the distinction of being the first country globally to roll out a CBDC, providing the Sand Dollar to all 393,000 inhabitants in October 2020.
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