The Bahamas is gearing up to enact legislation mandating that commercial banks support its Sand Dollar central bank digital currency (CBDC) in a bid to enhance its adoption rates.
According to a report from Reuters dated June 2, John Rolle, governor of the Bahamas central bank, noted that due to the sluggish adoption of the CBDC thus far, commercial banks will soon be legally obliged to facilitate the distribution of digital currency. Rolle indicated that the CBDC regulations are expected to be finalized and enforced within the next two years.
“We anticipate a process wherein all commercial banks will eventually participate in this initiative, mandated to offer their clients access to the central bank digital currency,” Rolle added.
The adoption of the Sand Dollar has been relatively subdued within the nation, reportedly constituting less than 1% of the currency in the Bahamas since its introduction in 2020. Meanwhile, the total volume of Sand Dollar wallet top-ups dwindled significantly from $49.8 million to just $12 million between January and August last year.
While mandating commercial banks to integrate the Sand Dollar will necessitate substantial technological upgrades for each bank, the Bahamas central bank asserts that boosting the adoption of CBDCs and mobile payments more broadly is imperative.
The Bahamas stands as the pioneer globally in issuing a CBDC, launching its Sand Dollar digital currency to all 393,000 residents in October 2020.
In a related context, several countries, including China and Nigeria, have faced challenges in achieving expected rates of CBDC adoption despite concerted efforts. China’s CBDC pilot program, for instance, encountered resistance from government workers preferring traditional cash due to concerns over usability and surveillance. Similarly, Nigeria, a trailblazer of CBDCs in Africa, has seen minimal uptake of eNaira wallets among its banked populace.
These developments underscore the evolving landscape of digital currencies globally, with governments and central banks navigating regulatory, technological, and societal considerations in their adoption strategies.