Bahamas launches digital currency

(Photo: Courtesy pymnts.com)

The Central Bank of The Bahamas (CBB) has introduced a digital version of the Bahamian dollar, starting with a pilot phase in Exuma and extending in the first half of 2020 to Abaco.

The bank said that this initiative has acquired the name Project Sand Dollar. Sand Dollar is also the name assigned to the proposed central bank digital currency (CBDC).

“This is a continuation of the Bahamian Payments System Modernization Initiative (PSMI), which began in the early 2000s. The Bahamian PSMI targets improved outcomes for financial inclusion and access, making the domestic payments system more efficient and non-discriminatory in access to financial services,” the CBB said in a statement.

It said although average measures of financial development and access in the country are high by international standards, pockets of the population are excluded because of the remoteness of some communities outside of the cost-effective reach of physical banking services.

It said more onerous customer due diligence standards for money laundering and the combatting the financing of terrorism (AML/CFT) international tax compliance have also resulted in forms of exclusion, including more recent responses to tighter “know your customer” (KYC) systems introduced to preserve international correspondent banking relationships.

“As recent policy and regulatory reforms have begun to tackle these barriers, the Central Bank is intent on accelerating payments system reform, admitting new categories of financial services providers and using the digital payments infrastructure to make the supply of traditional banking services accessible to all segments of the population.”