Bahamas’ Sand Dollar nears commercial rollout as interoperability completed
Following cybersecurity assessments, commercial institutions are being cleared to issue the world’s first CBDC: the Bahamas’ Sand Dollar.
The Central Bank of the Bahamas has announced that its central bank digital currency, the Sand Dollar, is expected to achieve full interoperability between its various wallet providers within the week.
A recent statement released by the CBoB revealed that authorized financial institutions, or AFIs, such as payments service providers are expected to be finalized within the coming days.
Essentially acting as wallet providers and prospective issuers of the Sand Dollar, the AFIs in question have been subject to rigorous cybersecurity assessments, the bank stated. The institutions that adopted the bank’s own app have already been cleared to participate, while those that intend to use their own proprietary apps are still being processed. A deadline of Wednesday is expected to be met.
In October 2020, the Sand Dollar became the first CBDC in the world to go beyond the pilot stage and achieve an official launch. The centrally issued digital currency became available for use by all Bahamian citizens upon release, while integration with the commercial banking system has been subject to a gradual rollout. The completion of that integration is now imminent, according to the bank.
“The Central Bank expects to imminently complete the technical integration of the digital infrastructure with the commercial banking system. This will establish links between wallets and bank deposit accounts, through the Bahamas Automated Clearing House (the ACH), and allow transfer of funds in both directions,” the bank stated.
Nine institutions have been cleared to operate as CBDC issuers to date, consisting of four money transmission businesses, three payment services institutions, one credit union and one commercial bank. Interoperability between these entities would allow for the Sand Dollar to be distributed and used more efficiently across a range of different applications. Each Sand Dollar is pegged to the value of the Bahamian dollar, which in turn is pegged to the value of the U.S. dollar.
The CBoB also released new draft regulations aimed specifically at the way payment services providers interact with the Sand Dollar, with a purported focus on consumer protection. The regulation is expected to be finalized by May 1.
“The draft Regulations are intended to enhance the existing legislative framework governing Payment Services Providers (PSPs), specific to their provision of central bank digital currency (CBDC) linked services,” the statement said.
