The Central Bank of the Bahamas has launched a digital currency pilot in Exuma, according to a recent press release.
According to the bank’s publication, the Sand Dollar Project is a digital version of the Bahamas dollar, which will begin its pilot phase in the Exuma district from December 27, 2019, and will be extended in the first half of 2020 to Abacus.
This action is part of the Bahamas Payment System Modernization Initiative (PSMI), which began operation in the early 2000s.
The Bahamas PSMI aims for better results for financial inclusion and access, so that the national payment system is more efficient and non-discriminatory in access to financial services, as indicated in the statement.
There are some sectors of the population that are excluded by the remoteness of some communities and are beyond the reach of physical banking services.
In addition, stricter international policies such as “know your client” (KYC), introduced to preserve international correspondent banking relationships, also resulted in other forms of exclusion in the population.
As a result, regulatory reforms of the Central Bank of the Bahamas begin to address these barriers to accelerate the payment system, as detailed.
Benefits of the digital currency
Although they point out that the benefits cannot be quantified, they emphasize that a suppression of the economic costs associated with the use of cash is possible.
In addition, the Government may improve expenses and tax administration systems, as published.
Similarly, they expect the Government, as a participant and user, to be a strong promoter of the adoption of digital payments, together with non-bank payment service providers as the main initial intermediaries in this space.
Reforms in the national payment system
While the pilot advances in Exuma, the Central Bank will be responsible for simultaneously promoting the development of new regulations for digital currency and will strengthen consumer protection, specifically in the standards related to data protection.
The Bank will also be responsible for promoting reforms that allow the direct participation of non-bank entities in the national payment system.
Similarly, they noted that early approval of the new bill of the Central Bank of the Bahamas will support the creation of some regulations, while additional reforms will be possible under the existing Payment Systems Law.
Islands with their own digital currencies
Like the Bahamas, there are governments of other islands with announced digital currency projects, such as the Government of the Virgin Islands and that of the Marshall Islands.
Earlier this month, the Virgin Islands Government announced the creation of a stablecoin, called BVI ~ LIFE. to be used within the British overseas territory in the Caribbean
What the government intends is to implement, with the help of LIFElabs, the digital currency of the central bank (CBDC) promoted by LIFEtoken and linked 1 to 1 against the dollar.
At that time, Prime Minister Andrew Fahie said:
“The importance of blockchain technology and the significant benefits offered by BVI are paramount for the Territory. We welcome this innovation with open arms. Our partner, LIFElabs, has demonstrated with his proven track record that his ideology is not just words, and we hope to continue our partnership with them in the launch of BVI ~ LIFE, our digital currency. ”
On the other hand, the Marshall Islands Government announced in September the creation of its digital currency called Sovereign (SOV).
The Minister of Environment and Minister of Assistance of the President of the Republic of the Marshall Islands, David Paul, spoke about it at a conference held in Singapore:
“With blockchain technology in operation, we thought this was an opportune time to establish our own legal tender.”
In addition, the government seeks to reduce the nation’s dependence on the US dollar, said the minister.