Bahamas to Require All Commercial Banks to Provide Access to Its CBDC
In April, the Bahamas had just over 2.4 million Sand Dollars in circulation, compared to 559 million Bahamian dollar notes.
- Despite being the first fully implemented CBDC, the Sand Dollar accounts for less than 1% of currency in circulation, with declining adoption and wallet top-ups.
- Foreigners and visitors can use the CBDC with a no-KYC account.
- The Bahamas’ Central Bank Governor said the CBDC was widely used but had a “very low average transaction value.”
Bahamas’ Central Bank Governor John Rolle announced that all commercial banks in the country must provide access to the “Sand Dollar,” the country’s central bank digital currency (CBDC), within the next two years. Launched four years ago, the Sand Dollar was the first fully implemented CBDC globally.
“We foresee a process where all of the commercial banks will eventually be in that space and they will be required to provide their clients with access to the central bank digital currency.” — John Rolle
With a population of over 415,000, the Bahamas has just over 2.4 million Sand Dollars in circulation, compared to more than 565 million Bahamian dollar notes. The Sand Dollar, pegged directly to the Bahamian dollar (BSD), shares a fixed 1:1 exchange rate with the US dollar (USD).
Foreigners and visitors can access the Bahamas’ CBDC through the central bank’s app, which offers a basic no-KYC account. Meanwhile, the European Central Bank, currently testing its own CBDC, plans to mandate its acceptance by eurozone retailers and banks, per Reuters.
Adoption of the Sand Dollar
The Sand Dollar represents less than 1% of the currency in circulation in the Bahamas. Wallet top-ups have significantly decreased, totaling just $12 million in the eight months leading up to August 2023, compared to $49.8 million during the same period in 2022.
In a June 19 interview with The New Times, Central Bank Governor John Rolle described the Sand Dollar as widely used but noted its “very low average transaction value.” He mentioned that only 120,000 mobile wallets were used and that just 20% of retail bank accounts were linked to the CBDC.
According to the Central Bank’s April 2024 report, over 559 million Bahamian dollar notes were in circulation, but only around 2,459,000 Sand Dollars. This was a slight increase from the previous month, when 2,448,000 Sand Dollars were in circulation, reflecting a modest rise of approximately 11,000 Sand Dollars.
Small Country of Bahamas
As of 2024, the Bahamas’ population exceeds 415,000, with 18% unbanked, according to the World Economic Forum. However, a 2023 report by Inter Economics highlighted that in Exuma, a district in the Bahamas, 96% of residents owned mobile devices, and 40% used their devices for bill payments or online banking transactions.
Upon the rollout of the Sand Dollar, users were offered three tiers, each with different Know Your Customer (KYC) requirements. The basic tier allows users to hold up to 500 Sand Dollars and transact up to 1,500 Sand Dollars monthly without KYC requirements.
When asked about visitors using the local CBDC, Central Bank Governor John Rolle explained that they could use the Level 1 wallet, which permits holding and transactions without KYC requirements.
With a relatively small population, Governor John Rolle aims to make the Bahamas’ CBDC, the Sand Dollar, more accessible over the next two years. Although the Bahamas does not plan to offer incentives or interest rates to encourage using Sand Dollars, the strategy focuses on increasing adoption by making the digital currency more widely available and user-friendly.
Despite making international news for hosting FTX’s Sam Bankman-Fried, the Bahamas remains committed to digitalization and the widespread adoption of its CBDC, continually updating its app to enhance accessibility and improve user experience.
