Central Bank of the Bahamas Selects Blockchain Startup NZIA for Digital Currency Project

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Central Bank of the Bahamas Selects Blockchain Startup NZIA for Digital Currency Project

By Diana Ngo - min read
Updated 29 May 2020

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
on March 1, 2019.

Image: Nassau, Bahamas, by IchSapphire, Flickr

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

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

“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.”