Narayan AmmachchiVoluntary measures have failed. The Central Bank of the Bahamas directed commercial banks to expedite the adoption of the country’s official digital currency, signaling a shift from encouragement to enforcement.
Known as the “Sand Dollar“, the digital currency of the Bahamas was launched officially in an attempt by financial authorities to enhance transparency and boost the use of mobile payment systems across the island.
Only 1% of Bahamas’ population uses the Sand Dollar. Analysts suggest that banks have been reluctant to issue more Sand Dollars fearing decreases in deposit rates and a subsequent need to curtail their lending capacities.
Local residents also show little enthusiasm for the Sand Dollar, wary that its use might invite increased government scrutiny of their financial activities.
While commercial banks are expected to comply with the Central Bank’s orders, analysts warn that retailers and other businesses may resist accepting the digital currency.
There haven’t been many incentives to adopt the Sand Dollar. To comply with the Central Bank’s orders, commercial banks need to invest in IT infrastructure updates and cybersecurity enhancements.
The Bahamas is not the only country facing challenges with digital currency adoption. Jamaica also has a digital currency with similarly low usage rates.
Despite an initial surge in demand during the COVID-19 pandemic, digital payment adoption in the Bahamas has been declining over the years.
Launched in 2020 amid the pandemic, the Sand Dollar is pegged to the value of the Bahamian dollar and differs from cryptocurrencies in that it is centrally regulated and controlled.
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