Last month, John Rolle, the Governor of the Central Bank of Bahamas, shared an update on the rollout of the Bahamas’ central bank digital currency (CBDC), known as the sand dollar, which went live in October last year.
The digital currency’s motivations are to promote financial inclusion, modernize the payment system, and make private wallet systems interoperable.
While the Bank centrally controls the core infrastructure for minting currency, the customer-facing aspect is primarily done by the private sector. So far, nine institutions have integrated their mobile wallet applications, including four money payment firms, three payment providers, a bank and a credit union.
At the Bank for International Settlements (BIS) Innovation Summit, Governor Rolle explained that the CBDC release was a gradual one that is still in progress. Since it first started piloting the digital currency in 2019, the need has increased following the bank branch devastation from Hurricane Dorian in 2019 and COVID-19.
In hurricane-prone areas, bank branches might take months to rebuild. It’s quicker to repair the antennae needed for digital payments.
However, there was already a desire for a digital currency to address financial inclusion. That’s because banks have been scaling back services and there’s a concern that remote island areas are now underserved. Rolle observed that it’s mainly an issue for payments.
Our interpretation is if ATMs are no longer available, the problem is less about the access to cash and more about the use of money to pay for stuff. Hence if cash is digital, the lack of ATMs is not such an issue, provided payments remain free as they are currently with the sand dollar.