The Bahamas is set to introduce legislation mandating commercial banks to support its “Sand Dollar” central bank digital currency (CBDC) in an effort to boost its adoption.
According to a June 2 report from Reuters, John Rolle, the governor of the Bahamas central bank, stated that due to the less-than-ideal uptake of the CBDC so far, commercial banks will soon be legally required to distribute the digital currency.
Rolle mentioned that the new CBDC regulations should be ready for enforcement within the next two years.
“We foresee a process where all of the commercial banks will eventually be in that space, and they will be required to provide their clients with access to the central bank digital currency,” Rolle added.
Adoption of the Sand Dollar in the Bahamas has been somewhat lackluster, with the CBDC reportedly accounting for less than 1% of the country’s currency since its introduction in 2020.
The total volume of Sand Dollar wallet top-ups has also seen a significant decline, falling to just $12 million between January and August last year, compared to $49.8 million in the same period in 2022.
Requiring commercial banks to distribute the Sand Dollar would entail significant technological overhauls for individual banks. However, the Bahamas central bank emphasizes that boosting the adoption of the CBDC and mobile payments more broadly is crucial.
The Bahamas is not alone in experiencing lower-than-expected rates of CBDC uptake.
In May, several government workers enrolled in China’s CBDC pilot program expressed a preference for cashing out their digital “e-CNY” for traditional currency. They cited limited usability and concerns about government surveillance.
Nigeria, the first African country to launch a CBDC, is facing similar challenges. Despite numerous efforts to boost adoption, the uptake of the eNaira has been disappointing. As of mid-2023, less than 1% of Nigerians with bank accounts had eNaira wallets, and less than 1.5% of those wallets were active on a weekly basis.
The Bahamas was the first country in the world to introduce a CBDC, issuing its Sand Dollar digital currency to all 393,000 residents in October 2020.
