John Rolle, the Governor of the Central Bank of Bahamas, has shared some updates on the rollout of the Bahamas’ central bank digital currency (CBDC) which went live in October 2019.
Also known as the sand dollar, the currency’s motivations are to promote financial inclusion, modernise the payment system, and make private wallet systems interoperable.
A key goal of the Sand dollar is to be accessible and not to exclude users based on technology. Therefore, the currency is available on a smart card, not just smartphones, to help with the elderly. At the other end of the age scale, children often run errands and have pocket money, so they need to have access to digital cash. However, minors must get consent from their parents.
The combination of identity and minors also highlights the importance of privacy. The penalty for confidentiality breaches by wallet providers or others is USD 50,000 or up to three years in prison, or both, according to Ledger Insights.
The currency is not anonymous, so users must go through standard bank-grade know your customer (KYC) processes. However, not everyone has a photo ID that’s needed for a bank account. So, a lower access tier only requires an email address or phone number, allowing balances of up to USD 500 and USD 1,500 in transactions per month. With full KYC, a person can hold up to USD 8,000 digitally.
Another key advantage of the digital currency is interoperability between mobile payment apps. Initially the apps can allow users to use the Sand dollar within their walled garden. Going forward, the wallet providers will be required to allow balances to be transferred to other mobile wallets.
While the Bahamas is progressing its rollout, others in the region are looking to catch up. The Eastern Caribbean has launched its pilot, and Jamaica recently announced plans as well. To learn more about CBDCs, download our ebook Central Bank Digital Currencies for Beginners – A Quick Guide into CBDCs.
