KEY POINTS

  • Sand Dollar was launched to create more financial inclusions among the many remote islands of the archipelago
  • Its pilot launch began last year
  • China is currently testing a pilot program for its digital currency

The Bahamas has successfully launched "Sand Dollar" – a central bank-backed virtual currency that is available in the entire archipelago.

The Sand Dollar was made available to the entire population of the country of around 393,000 on Oct. 20, making  Bahamas the first country to roll out a central bank digital currency (CBDC) nationwide. 

It can be accessed through mobile phones. It may be noted that 90% of the population in the Bahamas have access to mobile phones. The CBDC can be used at any shop that has an e-wallet facility approved by the Central Bank of the Bahamas. 

The pilot launch of the Sand Dollar was in 2019 when 48,000 of the CBDC were tested in the Exuma and Abaco islands. One digital Sand Dollar is pegged to the Bahamian dollar, which is pegged to the U.S. dollar, Cointelegraph reported.

The Sand Dollar was created to drive greater financial inclusion among the more remote islands in the archipelago, said Chaozhen Chen, the assistant manager of eSolutions at the Central Bank of the Bahamas. "A lot of residents in those more remote islands don’t have access to digital payment infrastructure or banking infrastructure," he told Bloomberg, adding, "We really had to customize the effort and the solution to what we need as a sovereign nation."

While a lot of countries are studying or experimenting with CBDCs, China appears nearer to launching a digital currency ahead of the other developed nations, including the United States. China has been piloting CBDCs in key cities.

Federal Reserve Chairman Jerome Powell, in a recent panel discussion at the International Monetary Fund (IMF) annual meeting, said it's more important for the United States to get it right rather than be the first to issue one. He said since the U.S. dollar is the global reserve currency, anything pertaining to it, including the launch of a CBDC, will have global effects.

Bahamas Pictured: Bahamas coast. Photo: Yolanda Rolle/Pixabay