The Bahamas is gearing up to enforce legislation that mandates commercial banks to facilitate transactions with its Sand Dollar central bank digital currency (CBDC), aiming to bolster its adoption. According to a June 2 report from Reuters, John Rolle, Governor of the Central Bank of The Bahamas, expressed concerns over the current low adoption rates of the CBDC. As a result, commercial banks will soon be legally obligated to distribute the digital currency.
Rolle indicated that the CBDC regulations are expected to be fully implemented within the next two years. “We anticipate a phased approach where all commercial banks will eventually participate, providing their clients access to the central bank digital currency,” Rolle affirmed.
The Sand Dollar has seen modest adoption within the country, accounting for less than 1% of the total currency despite its launch in 2020. Notably, the volume of Sand Dollar wallet top-ups decreased significantly, dropping from $49.8 million between January and August 2022 to just $12 million in the same period last year.
While mandating the distribution of the Sand Dollar will necessitate substantial technological upgrades for banks, the Bahamas central bank underscores the importance of enhancing CBDC adoption and promoting mobile payments more broadly.
The Bahamas is not alone in grappling with lower-than-expected CBDC uptake. In China, participants in the CBDC pilot program expressed a preference for converting digital yuan to physical cash, citing usability limitations and concerns about governmental oversight. Similarly, Nigeria, a pioneer of CBDCs in Africa, faces challenges with adoption despite numerous initiatives. By mid-2023, less than 1% of Nigerians with bank accounts had eNaira wallets, with less than 1.5% of those wallets actively used on a weekly basis.
As the first country globally to launch a CBDC, The Bahamas introduced its Sand Dollar digital currency to all 393,000 residents in October 2020.