Advancing Financial Inclusion and Efficiency
June 29, 2023 – In a landmark initiative that marks a transformative leap towards a modernized and inclusive financial system, the Central Bank of The Bahamas (CBOB) has successfully launched the national rollout of its central bank digital currency (CBDC), Sand Dollar. This groundbreaking endeavor, known as Project Sand Dollar, commenced in the Exuma and Abaco islands in late 2020, and has now expanded to encompass all residents of The Bahamas, serving as a testament to the nation’s commitment to embracing innovation and driving financial inclusion.
Project Sand Dollar’s rollout has been meticulously planned and executed, adopting a phased approach to ensure a seamless and smooth transition for authorized financial institutions (AFIs) to integrate Sand Dollar services into their offerings. These AFIs, encompassing commercial banks, credit unions, money transmission businesses (MTBs), and payment service providers (PSPs), played a pivotal role in the pilot phase, investing significantly in technology platforms to support mobile wallets and facilitate Sand Dollar transactions.
The initial phase of the national rollout focused on enabling AFIs to provide Sand Dollar services to their customers, stringently adhering to risk-based customer due diligence (KYC) requirements to safeguard the integrity of transactions. This phase encompassed all three tiers of authorized accounts: low-value personal wallets with minimal transaction limits, regular personal accounts, and business or enterprise accounts with higher limits and stricter KYC requirements.
To ensure widespread adoption and address potential exclusion in remote areas, CBOB intensified engagement and outreach with key private stakeholders throughout the months leading up to the national rollout. A dedicated focus on Family Island engagement prioritized the rollout in these communities, ensuring that the benefits of Sand Dollar extended to all residents of The Bahamas, irrespective of their geographic location.
Recognizing the paramount importance of security and privacy in digital transactions, CBOB implemented rigorous measures to safeguard Sand Dollar. The Sand Dollar platform underwent a comprehensive cybersecurity assessment, and all AFIs were required to undergo similar assessments prior to integration. Additionally, Sand Dollar-integrated wallets employed multi-factor authentication features, requiring device passcodes or biometrics for access, reinforcing the utmost protection of user information and financial assets.
While Sand Dollar does not replicate the anonymity feature of cash, its infrastructure prioritized confidentiality and data protection. Each wallet utilized unique data encryption to ensure privacy, ensuring that user information remained secure and confidential. Moreover, all transactions were linked to an anti-money laundering/counter financing of terrorism (AML/CFT) engine to comply with regulatory standards and maintain adherence to international AML/CFT norms.
The Bahamian digital currency framework evolved alongside the dynamic payments ecosystem, necessitating an agile regulatory structure. CBOB actively engaged with stakeholders to ensure that the legal framework aligned with domestic payments needs and international AML/CFT standards. Robust mechanisms were instituted to preserve financial stability and maintain the central role of private financial institutions in the intermediation process, ensuring that the national rollout of Sand Dollar occurred in a cohesive and supportive environment.
Paving the Way for a More Equitable and Efficient Financial Landscape
Project Sand Dollar’s successful national rollout represents a groundbreaking achievement in The Bahamas’ financial landscape. The adoption of Sand Dollar is expected to revolutionize the way residents access and manage their finances, fostering financial inclusion, enhancing transactional efficiency, and driving economic growth across the nation. The central bank’s commitment to a comprehensive rollout and robust security measures ensures that Sand Dollar will continue to play a pivotal role in The Bahamas’ financial future, shaping a more equitable, efficient, and inclusive financial ecosystem for all residents.
