The Bahamian digital currency, known as the Sand Dollar, has been in a tough spot following the collapse of cryptocurrency exchange FTX. FTX, once one of the largest exchanges globally, filed for bankruptcy last year, bringing unwanted attention to The Bahamas. The country’s Securities Commission faced scrutiny over its involvement in the FTX collapse, with some alleging unauthorized access to FTX systems. Prior to this incident, The Bahamas was known for pioneering digital fiat with the Sand Dollar, the world’s first Central Bank Digital Currency (CBDC).
Despite being the first CBDC in the world, the Sand Dollar has seen limited adoption, with the recent FTX crash complicating matters further. Kimwood Mott, the project manager for digital currency implementation at the Central Bank of the Bahamas, attributed the lackluster start of the Sand Dollar to the pandemic, which hindered government efforts to promote the digital currency. The Central Bank believes the Sand Dollar can help address various systemic objectives, including financial inclusion, fraud reduction, money laundering prevention, and providing sovereign alternatives for digital payments.
To encourage adoption of the Sand Dollar, the Central Bank of the Bahamas is ramping up education efforts. Events like a wine and food festival where the Sand Dollar was the sole form of payment have helped increase national usage. The central bank is also collaborating with private digital wallet providers to reach niche populations. Despite the challenges faced by the Sand Dollar, The Bahamas is not alone in exploring CBDCs. Ten countries have already launched their own CBDCs, while 105 countries are exploring the idea of a national digital currency.
The FTX collapse has overshadowed the potential benefits of the Sand Dollar in The Bahamas. The Central Bank of the Bahamas views the digital currency as a tool to achieve financial inclusion, combat fraud, and provide a sovereign digital payment alternative. However, widespread adoption remains a hurdle that the central bank is addressing through education and collaborations with private digital wallet providers. The global trend towards CBDCs is evident, with several countries already launching their own versions and many others exploring the concept.
The Sand Dollar’s troubled start due to the FTX collapse has not deterred the Central Bank of the Bahamas from promoting the benefits of a CBDC. Despite initial challenges, the Sand Dollar has the potential to be a transformative tool for the country by enhancing financial inclusion, reducing fraud and money laundering, and providing digital payment alternatives. The Bahamas is actively working to increase adoption of the Sand Dollar through education initiatives and partnerships with digital wallet providers. The global movement towards CBDCs further underscores the potential for digital currencies to shape the future of finance.
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