The Central Bank of the Bahamas has selected NZIA Limited as the technology solutions provider for its Project Sand Dollar, a project aimed at developing a blockchain-based central bank digital currency. NZIA will be responsible of designing and implementing the digital fiat currency system for the Bahamas, the central bank said on March 1, 2019.
The Central Bank of the Bahamas describes NZIA as combining “the collective know-how and expertise of IBM, a leader in enterprise blockchain, along with Zynesis Pte. Ltd., a Singapore-based software development company specialized in blockchain solutions.”
Zynesis is a blockchain and research and development lab and consultancy that designs and builds decentralizations systems and solutions. Zynesis’ clients include Sparrow Exchange, which the company helped create a cryptocurrency options platform built on Ethereum technology, TenX, to which it provided blockchain and software development services for its token sale, and Singapore’s Government Technology Agency, for which it designed and developed SmartNode, a proof-of-concept of a decentralized procurement system for smart homes and offices that promotes open economy.
Project Sand Dollar seeks to provide residents in the Bahamas with equal, expanded access to modern digital payments capabilities and curb cash transactions. The new payments infrastructure is expected to reduce service delivery costs, increase transactional efficiency and improve the overall level of financial inclusion in communities throughout the archipelago.
A pilot phase will be rolled out across chosen “family island communities.”
Legislative reforms will accommodate the functional aspects of the digital currency. The draft Central Bank of the Bahamas Bill, 2019, now before the government, anticipates this framework, and will provide for the development of regulations to govern the instrument.
The regulatory framework will include safeguards to satisfy exchange control regulations, monitoring and controls against money laundering and terrorist financing, and specifications to ensure complementarity as opposed to material substitutability for existing banking services.
The central bank digital currency project was unveiled in June 2018 by Kevin Peter Turnquest, deputy prime minister and minister of finance of the Bahamas, in a speech at the Bahamas Blockchain and Cryptocurrency Conference.
“The production of a modern fully digital payment service is the way forward for this era of governance,” Turnquest said.
“A digital Bahamian currency is especially important for the many family islands as they have seen many commercial banks downsize and pull out of their communities, leaving them without banking services. As an island nation, where transportation can be an inconvenience for many, especially the elderly, and costly, we must offer financial services digitally and securely.”
Turnquest added that he hopes the island of Grand Bahama will become the digital paradise of the region.
“Digitization of our government and financial services complements both our ease of doing business initiatives and our digital Bahamas framework,” he said.
Among key possible applications of blockchain, Turnquest mentioned diplomas issuance and registration, as well as e-government services such as digital IDs.
“Even though it is at a very preliminary form, the government is looking to see other ways in which certificates such as business licenses, passports, national insurance can make use of blockchain technology to enable persons to maintain their data and share it in a secure and verifiable way.”