March 29, 2021
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 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 regulation is expected to be finalized by May 1.
Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.