The Bahamas is gearing up to pass a law that would make it mandatory for commercial banks to support the central bank digital currency (CBDC) known as “Sand Dollar” in an effort to increase its usage.
As reported on June 2 by Reuters, John Rolle, the governor of the Bahamas central bank, stated that due to the low acceptance of the CBDC so far, commercial banks will now be obligated by law to distribute the digital currency.
Rolle mentioned that the rules governing the CBDC are expected to be enforced within the next two years.
“We anticipate a process where all commercial banks will eventually be involved and they will be mandated to offer their clients access to the central bank digital currency,” added Rolle.
The adoption of the Sand Dollar in the country has been less than impressive, with the CBDC accounting for less than 1% of the currency in the Bahamas, despite being introduced in 2020.
Furthermore, the total amount of Sand Dollar wallet top-ups has dropped to just $12 million between January and August last year, down from $49.8 million during the same period in 2022.
While requiring commercial banks to distribute the Sand Dollar would mean significant technological changes for individual banks, the Bahamas central bank emphasizes the importance of boosting the adoption of the CBDC and mobile payments more broadly.
The Bahamas is not the only country experiencing lower-than-expected rates of CBDC adoption.
In related news:
The Banque de France and the Hong Kong Monetary Authority are exploring CBDC and tokenization
Several government workers participating in China’s CBDC pilot program expressed a preference for converting their digital “e-CNY” into traditional cash in May, citing limited usability and concerns about government surveillance.
Nigeria, the pioneer of CBDCs in Africa, is facing similar challenges. Despite numerous efforts to increase adoption, the country has seen a decline in the rates of CBDC usage among its citizens. As of mid-2023, less than 1% of Nigerians with bank accounts had eNaira wallets, and less than 1.5% of those wallets were active on a weekly basis.
The Bahamas made history as the first country in the world to introduce a CBDC, issuing its Sand Dollar digital currency to all 393,000 residents in October 2020.
Source: Sand Dollar, The Central Bank of The Bahamas.
Bahamas Mandates Banks to Back Its Sand Dollar CBDC