|
Getting your Trinity Audio player ready...
|
The Bahamas plans to force its commercial banks to support its Sand Dollar CBDC, the country’s central bank governor has revealed.
Sand Dollar was launched in October 2020 as the world’s first central bank digital currency (CBDC). The Central Bank of the Bahamas believed that the digital currency would boost financial inclusion, “reduce service delivery costs and increase transactional efficiency for financial services.”
However, nearly four years later, it has failed to receive the uptake the central bank envisioned, forcing Governor John Rolle to explore other strategies.
Speaking to Reuters, Rolle revealed that the regulator has “begun to signal to our institutions” the prospect of mandatory CBDC support.
“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,” stated Rolle, who has led the top bank since 2016.
The imposition of a CBDC on commercial banks has divided opinion globally. In some jurisdictions, lenders remain apprehensive of digital currencies, which they believe could lead to competition for bank deposits with central banks.
This includes the EU, where the European Central Bank (ECB) has been advancing its digital euro project. National banking associations in Italy, Germany, and other leading economies have demanded that banks be placed at the heart of the CBDC movement and that their interests be protected. ECB has dismissed such fears, saying that holding limits and zero interest will disincentivize residents against holding the digital currency.
In some jurisdictions like Israel, the central bank admits that a CDBC would cause disintermediation, but has played it off as a net positive for consumers.
For the Bahamas, the central bank’s intervention is critical if the Sand Dollar is to survive. By February this year, the digital currency had only attracted $2.1 million of the cash in circulation, accounting for a mere 0.5%.
Watch: CBDCs are more than just digital money
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
