The small Caribbean nation of Bahamas has announced the launch of one of the world’s first Central Bank Digital Currencies and they have named it the Sand Dollar. The central bank of the country will launch the new digital currency in October 2020, just one month from press time according to an interview from Bloomberg.
The Central Bank Digital Currencies
While much of the cryptocurrency world is known for not lying under the control of any national government, the blockchain technology behind the cryptocurrencies which is used to secure transactions is open-source and thus can be adopted by anyone looking to benefit from it. This is why the central banks around the world are looking to implement it and create innovative solutions that work in the modern digital world.
Central Bank Digital Currencies (CBDCs) are one of these innovations to come out of the sector. As the name suggests, these are basically digital tokens launched by the central government through their reserve banks. Various countries around the world are considering such innovative approaches including China, Russia and others while still others like Japan have rejected the concept entirely for now.
This needs to be cleared however that the Petro cryptocurrency launched by the economically stricken government of Venezuela is not a CBDC in the strict sense as the government claims it has some physical backing of actual crude oil barrels. CBDCs are generally referred to national currencies that are re-imagined as digital currencies, not new ones built entirely from scratch with a different economic model.
The Sand Dollar
Bahamas is launching the new CBDC next month for a variety of reasons which will become clearer as the launch draws near. According to the Assistant Manager of eSolutions at the Bahamas Central Bank Chaozhen Chen:
A lot of residents in those more remote islands don’t have access to digital payment infrastructure or banking infrastructure. We really had to customize the effort and the solution to what we need as a sovereign nation.”
Chen further noted that the new crypto will be liable to the same regulations as the national currency i.e. the Bahamas Dollar. However, this may not be the only reason why Bahamas is launching the new Sand Dollar. The Archipelago is known for its status as a tax haven for the world’s richest companies and individuals. This could be a reason to go further digital and facilitate them.
Bahamas has been developing the Sand Dollar for a while now as it announced a pilot project back in 2018. More information will accompany the launch.