PROJECT SAND DOLLAR (Bahamas) Case Study:
Richard Ng
Blockchain and Digital Assets VP at UOB | CBDC | Asset Tokenisation | Blockchain | Web3
At first glance, it would seem, one of the world’s first officially launched #CBDC is also the most successful. With monthly transactions soaring from 15,000 in 2020 to a remarkable 85,000 by the end of 2022, and over 100,000 SandDollar wallets in circulation as of March 2023, it's evident that this pioneering #CentralBank #digitalcurrency (CBDC) has struck a chord with the Bahamian populace. While these figures paint a promising picture of adoption and usage, further exploration is needed to understand the nuanced impact and long-term sustainability of the SandDollar within the broader financial ecosystem of The #Bahamas.
Project Sand Dollar in a nutshell:
??Monthly Transactions: Monthly SandDollar transactions increased from approximately 15,000 in 2020 to 85,000 by the end of 2022, representing a 160% increase.
SandDollar Wallets: There were over 100,000 SandDollar wallets as of March 2023, with approximately 1,440 being merchant wallets.
??Wallet Holder Adoption Rate: Existing wallet holders represented between 20% and 25% of transactional account holders within the banking system.
??Transaction Types: Peer-to-peer and peer-to-business payments were valued at $55.7 million in 2022, with SandDollars representing a marginal portion of this.
??SandDollars in Circulation: As of March 2023, there were over 1 million SandDollars in circulation, representing less than 1% of total Bahamian dollars in circulation.
Factors Contributing to CBDC Success
As the global landscape of digital currencies continues to evolve, there are invaluable lessons to be gleaned from The Bahamas' experience with the SandDollar. Strong government support, coupled with a clear regulatory framework, lays the foundation for CBDC success. However, it is the commitment to technological innovation and accessibility that truly drives adoption and acceptance.
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Key Objectives
- Promoting financial inclusion and access
- Improving efficiency in financial services
- Universalizing access to banking services
- Reducing informal sector economic activities
- Integrating small businesses into the digital space
Problem Statement and Challenges Addressed:
- Disparities in access to basic financial services
- Stringent customer due diligence standards
- International tax compliance measures
- Archipelagic disparities in banking access
- Reluctance of businesses to adopt electronic payments
Builder/Developer and Infrastructure Framework:
- Central Bank of The Bahamas as the initiator
- Project Sand Dollar as part of Payments System Modernization
- Movmint as the technology solutions provider
- Introduction of new regulations and Central Bank Bill
- Emphasis on non-bank participation and modernizing payment systems
Operator:
The Central Bank plays a crucial role in currency issuance, monitoring holdings, and sponsoring centralized Know Your Customer (KYC) and identity infrastructure.
Participant:
- Public sector as lead originators and recipients
- Businesses as core entities for digital payments
- General public as users of digital payments
- Financial intermediaries (e.g., banks, credit unions, etc.)
- Act as sponsors of mobile payment wallets
- Facilitate the circulation and use of Sand Dollar
Hi Richard Ng thank you for this article. Some updated numbers from the Central Bank of the Bahamas disclosed during the Digital Euro Conference in February. 2.1 million SandDollars in circulation now (over a 100% increase year-over-year). Merchant wallet numbers stand at 1,800 today and growing. More news to come soon. This is just getting started.