- The pilot digital currency project of the Bahamas is set to go live in Exuma today.
People who reside in the Exuma island will be able to enroll in the Project Sand Dollar initiated by the Central Bank of the Bahamas. The Bahamian government thinks that giving residents mobile wallets will facilitate future payments on the island chain. The launch has been announced by central bankers on December 24.
The Sand Dollar Dubbed as a Digital Fiat Currency
Bankers wanted to mention the Sand Dollar is not a stablecoin or cryptocurrency, nor that it will compete with the Bahamian Dollar. They named it in the project outline as a “digital fiat currency”, which means a digital version of the currency in use. However, the Bahamas does have a long-term plan to launch a central digital bank currency (CBDC) that will also be called Sand Dollar and link businesses with domestic residents in a 100% digital payment infrastructure. This means people will be able to pay retailers via QR codes linked to their wallets, and banks will move funds digitally. By doing this, the Central Bank of the Bahamas is looking to cut costs for printing currency and transactions while improving the process of financial inclusion.
The Sand Dollar Kept under Restrictive Limits
At the moment, the Sand Dollar is facing many governmental restrictive limits. For example, businesses can’t have more than $1 million kept in their digital wallets. Besides, they can’t make transactions that are over one-eighth of their yearly business through wallets, in a month. Individuals have a $500 limit that can be increased through their accounts’ “enhanced due diligence”. As the outline says, the limits will be varied by the Central Bank with time, as necessary.
The Bahamas launching a retail-based digital currency comes as many governments are looking to launch their own CBDC schemes. For example, the Swedish Riksbank is working on the E-krona, whereas China is about to launch a CBDC in 2020.