Bahamas among emerging markets leading on central bank digital currencies
The Bahamas has been highlighted in a recently released report on the global move toward central bank digital currencies (CBDC), showing the Central Bank of The Bahamas (CBOB) is among those leading the way in the emerging technology.
The Bank for International Settlements carried out a survey in the latter part of 2019, asking the 66 central banks that participated – which included CBOB – if they work on CBDCs or not, and if they do, it further enquired about the type of CBDC and how advanced the work is.
The survey found that while 70 percent of banks see themselves as unlikely to issue any type of CBDC in the foreseeable future, 10 percent say they are likely to issue a general purpose CBDC in the short-term (i.e. within the next three years) and 20 percent in the medium term (i.e. within the next six years).
Emerging market economies (EMEs) like The Bahamas, which were represented by 45 countries in the survey, account for the majority of work that has progressed from conceptual research to experiments or proofs of concept, with only 10 percent having developed pilot projects.
Every central bank that has progressed to development or a pilot project is an EME institution, the survey found.
“Consistent with their stronger motivations, EME central banks consider themselves more likely to issue a CBDC than do their advanced economy peers. For general purpose CBDCs, every central bank reportedly very likely or likely to issue in the short term is an EME institution. Over the medium term, 90 percent are in EMEs. The difference is also stark for wholesale CBDCs, where all advanced economy central banks consider issuance unlikely or very unlikely over the short and medium term,” the survey notes.
Other regional central banks included in the survey were the Bank of Jamaica, the Cayman Islands Monetary Authority, the Central Bank of the Dominican Republic and Eastern Caribbean Central Bank – the monetary authority for a currency union comprised of the island economies of Antigua and Barbuda, Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Anguilla and Montserrat.
“The Central Bank of The Bahamas’ Project Sand Dollar is the pilot for a general purpose, account-based CBDC for domestic use only. A digital currency holder would have a direct claim on the central bank, legally equivalent to an account. The pilot will run for six months in 2020, with regulation and legislation for a potentially wider rollout potentially following at a later stage,” the survey notes.
“Remote communities that rely on cash and need to meet know your customer (KYC) requirements could benefit from a safe digital currency, especially since an estimated 93 percent of the population owns a mobile phone. To improve wider nondiscriminatory access to financial services and domestic payment efficiency, the central bank is also sponsoring a centralized KYC register, supporting a public education strategy and maintaining a ledger of all currency held. To avoid disintermediating the banking system, limits will be placed on the amount of digital currency that citizens and businesses can hold and no interest will be paid.”
The pilot phase of Project Sand Dollar was launched last month on Exuma. The central Bank intends to expand the pilot program to Abaco by the end of next month.
Paige started working as a business reporter in August 2016.
Education: Palm Beach Atlantic University in 2006 with a BA in Radio and Television News
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