Central Bank Digital Currencies (CBDCs) have been an integral part of progressive discussions within the cryptocurrency community. CBDCs are virtual representations of the fiat currency of a particular country. They are often based on blockchain technology and are issued and regulated by the official monetary organization of the country. The feature that makes them different from cryptocurrencies like Bitcoin and Ether is that CBDC’s are backed by the central bank’s deposits of the country’s currency and are regulated by the central bank while cryptocurrencies are not.
Cointelegraph discussed with Thomas Trepanier, Director of Business Development for Roxe at Apifiny, a digital platform for financial institutions, the role CBDCs could play in the world economy. He opined:
“CBDCs enable central banks to provide more financial inclusion, especially in markets that are struggling to compete globally. CBDCs also eliminate inefficient processes and foster better local and global transparency, especially given the importance of KYC compliance.”
The first CBDC to launch officially is the Bahaman Sand Dollar issued by the Central Bank of Bahamas, it was launched on October 21st. The Sand Dollar is a state-backed currency pegged to the Bahaman Dollar which is in turn pegged to the United States Dollar. As per the official website, Bahaman citizens can use this sand dollar as a payment to any merchant with a central bank-approved e-wallet on their mobile device while the transaction fees are negligible. This feature makes the sand dollar a retail CBDC as compared to wholesale CBDC’s which are tailored for the use of financial institutions. NZIA is the chosen technology solutions provider by the central bank to manage the operations of the digital currency.