The Sand Dollar will be used to promote financial inclusion across the country’s 700-island archipelago
The Central Bank of the Bahamas has formally announced the launch of the country’s Sand Dollar nationwide.
The Sand Dollar is a virtual currency that has been backed by the state, and according to a Facebook post made by the Project Sand Dollar group page, the central bank digital currency (CBDC) was made available to all the 393,000 residents of the Bahamas from around 10pm UTC. The value of the CBDC is pegged to the Bahamian dollar, which is in turn pegged to the US dollar.
This move has made The Bahamas the first country in the world to formally roll out a CBDC of their own.
Other countries that are working on the creation of their own CBDCs include China, currently in the middle of testing a pilot program for its digital yuan with a $1.5 million giveaway, and Cambodia, whose “Bakong” digital currency is expected to become operational in the next few months after its pilot launch in July 2019.
Citizens who want to conduct transfers with the Sand Dollar can do so through mobile phones; a strategic application of the virtual currency, since around 90% of the Bahamian population has been open to using mobile phones since 2017.
The Sand Dollar website explains how residents of The Bahamas are free to use the virtual currency at any merchant that has an e-wallet approved by the Central Bank on their mobile device, and that the transaction fees are “negligible.” The Central Bank partnered with the transaction provider NZIA to roll out the digital currency.
The Central Bank of the Bahamas has been working on the launch of the CBDC for several years now. In 2019, the Central Bank started a pilot program that used 48,000 digital Sand Dollars on the islands of Exuma and Abaco, both of which have a population of less than 25,000 people combined.
The purpose of the Sand dollar is to push for more financial inclusion within the Bahamas, which is an archipelago nation of more than 700 islands. Chaozhen Chen, who works as the assistant manager of eSolutions at the Central Bank of the Bahamas, explained how important this initiative was to bringing basic financial services to those who lived in the more remote areas.
“A lot of residents in those more remote islands don’t have access to digital payment infrastructure or banking infrastructure. We really had to customize the effort and the solution to what we need as a sovereign nation.” Chen said.