The governor of the Bahamas‘ central bank, John Rolle, told Reuters that the government is developing rules meant to essentially compel commercial banks to issue the Sand Dollar, the CBDC announced in 2020, as use of it remained restricted.

Adding that the Bahamas authorities have begun to indicate the new regulatory direction to local institutions, Rolle said the central bank expects a scenario “where all of the commercial banks will eventually be in that space.”

Officially starting in October 2020, the central bank of the Bahamas introduced the Sand Dollar. From the start of the year, the volume of Sand Dollars in circulation increased by 60.8% to $1.7 million as of the end of December 2023, central bank data showed.

Based on central bank data, the number of personal wallets for the Sand Dollar grew by 20% annually to 118,955 by the end of last year.

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Legislation and Implementation Timeline

John Rolle, Bahamas central bank governor, admitted in a June 2 Reuters article the less-than-ideal CBDC adoption thus far. As such, commercial banks will soon be legally obliged to disburse the digital money. Rolle said that within the next two years the CBDC regulations need to be ready for implementation. “We see a process whereby all of the commercial banks will eventually be in that space and they will be obliged to give their customers access to the central bank digital money,” Rolle said.

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Current Adoption and Challenges

Adoption of the Sand Dollar has been somewhat poor; the CBDC apparently accounts for less than 1% of the money used in the Bahamas since its inception in 2020. Furthermore, Sand Dollar wallet top-up volume dropped from $49.8 million in the same time in 2022 to barely $12 million between January and August last year.

Although mandating commercial banks to distribute the Sand Dollar would call for major technology changes for each bank, the Bahamas central bank emphasizes the need of increasing the acceptance of the CBDC and mobile payments.

Global Perspective on CBDC Uptake

The Bahamas is not alone in having difficulties embracing CBDC. Cashing out their digital “e-CNY” for conventional currency was preferred by some government employees registered in the CBDC pilot program in China, who cited limited usefulness and worries about government monitoring. Likewise, Nigeria, the first country in Africa to use CBDCs, has witnessed declining rates of acceptance of them. fewer than 1% of Nigerians with bank accounts had e-Naira wallets as of mid-2023; fewer than 1.5% of those wallets were active weekly.

With its “Sand Dollar” digital currency issued to all 393,000 of its citizens in October 2020, the Bahamas become the first nation in the world to adopt a CBDC.

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