The Bahamas’ Sand Dollar is the first digital fiat currency that is consumer-ready, according to global law firm Norton Rose Fulbright, which advised NZIA Limited, the company that helped the Central Bank of The Bahamas (CBOB) to develop and launch the digital Bahamian dollar, making the country one of the first nations in the world with a “postmodern financial system”.
Norton Rose Fulbright noted in a press statement that Sand Dollar, unlike cryptocurrencies, is legal tender issued by The Bahamas’ central bank.
CBOB launched the Sand Dollar in a pilot exercise on Exuma last month and plans to run the pilot for six months before expanding the digital currency throughout The Bahamas.
“The digital ‘Sand Dollars’ being minted and issued under Project Sand Dollar are central bank digital currency (CBDC) and are the first digital version of a country’s fiat currency issued by a state’s central bank and usable by the public,” the statement noted.
“A fiat currency is legal tender – such as the U.S. dollar or the euro – whose value is backed by the government that issues it and differs from a commodity money backed by a physical good such as silver or gold.
“As part of a phased rollout of the Sand Dollar ecosystem, Sand Dollars and accompanying digital wallets went live for the first time and were made available to the public in The Bahamas on December 27, 2019.
“As the world’s first consumer-ready, digital fiat currency, transactions using Sand Dollars began taking place immediately at local restaurants, supermarkets, bill payment services and even street vendor operations. All merchants and consumers were onboarded through banks and other mainstream financial institutions in The Bahamas.”
Norton Rose Fulbright noted in its statement that Project Sand Dollar will not only mean financial inclusion for the unbanked and the decline in the costs associated with using cash, but will also help to improve the government’s expenditure and tax administration systems.
John Kim, who led Norton Rose’s cross-border team, said in the statement that his team was forced to innovate solutions to fit Project Sand Dollar in order to meet the requirements of modern financial and regulatory regimes.
He added that those tailored solutions allow the Sand Dollar to be more secure, with instant transactions.
Managing Director of NZIA Simon Kim said in the release: “With the vision and support of the Central Bank of The Bahamas, we have succeeded in creating an inclusive ecosystem powered by digital legal tender on a distributed payment network.
“As Sand Dollar continues its rollout across The Bahamas, we look forward to seeing the positive changes our digital payment solution will bring to the people of this beautiful country.”
The Norton Rose Fulbright team included experts from Vancouver, Toronto, New York, Singapore and Johannesburg, while legal support came out of Singapore.
“The team assisted on NZIA’s successful request for proposals response, consulted on the design of NZIA’s unique CBDC solution and drafted and negotiated various documents, including the final agreement between NZIA Limited and the Central Bank of The Bahamas,” the statement revealed.