In October, the Bahamas plans to launch its central bank digital currency (CBDC), the Sand Dollar. Each Sand Dollar is equivalent to one Bahamian dollar, which in turn is pegged to the US dollar. The project was first announced in 2018 and pilots were unveiled on two island last December.
Every country has a unique set of reasons for potentially launching a CBDC. In the case of the Bahamas, a key driver is to promote financial inclusion and access.
The Bank reported that pockets of the population are excluded because of remoteness or because of more stringent know your customer (KYC) requirements. Also, in recent years numerous banking branches have closed for commercial reasons. Plus, improving financial inclusion helps to formalize the economy. For example, if small informal vendors can accept digital payments, they can establish a credit history and enter the formal sector. But we wonder about their concerns about paying taxes.
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