Bahamas regulator to require local banks to provide access to CBDC

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As a researcher with a background in digital currencies and central banking, I find the Central Bank of The Bahamas’ decision to mandate local banks to accept the Sand Dollar by 2026 an intriguing development. Given that the Sand Dollar currently accounts for less than 1% of currency in circulation and wallet top-ups have plummeted by 75%, it appears that the initiative aims to give a significant boost to the adoption of The Bahamas’ CBDC.

As a crypto investor, I’ve been keeping an eye on the developments in The Bahamas regarding their digital currency. Recently, I’ve learned that the central bank has announced its plans to mandate local banks to accept and deal with the country’s digital currency. Given the decreasing popularity of this currency, it will be interesting to observe how this move impacts the market.

According to sources familiar with the matter, the Central Bank of The Bahamas intends to require all local banks to implement the national central bank digital currency (CBDC) by 2026, as announced by the central bank’s governor, John Rolle.

Introduced in 2020 to broaden banking opportunities, the “Sand Dollar,” a central bank digital currency, is set to receive a substantial enhancement. According to Rolle, local banks will be required to grant their customers access to this digital currency as part of the central bank’s upcoming initiative.

The causes behind the rapid adoption of CBDCs in the Bahamas remain uncertain, but the Central Bank Digital Currency (CBDC) of this country currently represents only a tiny fraction – under 1% – of the circulating currency. Notably, wallet top-ups have experienced a significant decline, dropping from $49.8 million to $12 million between August 2023. (Sources: Reuters)

As an analyst, I’ve observed that The Bahamas isn’t the only country grappling with the adoption challenges of Central Bank Digital Currencies (CBDCs). Nigeria and Jamaica have reported minimal usage of their digital currencies according to Reuters. Likewise, India’s digital currency, the e-rupee, has experienced a significant drop in activity following local banks halting the artificial inflation of its metrics.

According to crypto.news’ previous coverage, the Reserve Bank of India reached a significant accomplishment of processing one million retail transactions in December. This was made possible through incentives offered by local banks to retail users and a portion of bank employees’ salaries being disbursed via the e-rupee system. Nevertheless, once these incentives were eliminated, daily transaction volumes dropped to approximately 100,000, indicating a clear absence of organic demand, as one source explained.

Regarding India’s situation, Rolle expressed doubt that the Bahamas would offer any monetary benefits for utilizing their Central Bank Digital Currency (CBDC).

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2024-07-01 16:30