The Bahamas cryptocurrency project by the country’s central bank is all set to offer protection against a Category 5 hurricane. Sounds strange? Yes, now cryptocurrencies are set to battle it out with actual hurricanes and protect communities from natural disasters. Project Sand Dollar is the nation’s answer to the ongoing global CBDC trend.
As per Nassau-based Central Bank of the Bahamas, they are working on a mobile-based central bank digital currency that can protect the country’s economy against the damage caused by a Category 5 hurricane. Such a project carries significant potential in a country that is constantly battered by hurricanes and struggles with aid distribution networks.
Bahamas cryptocurrency can amplify hurricane recovery efforts
In 2019, the Bahamas faced the full blow of Hurricane Dorian, resulting in extensive devastation. The country’s economy was staring at damages to the tune of $3.4 billion. However, what made matters worse was the destruction of the country’s financial infrastructure, including bank buildings, ATMs, and payment systems.
A large part of the Bahamian banking system remained shut off for many months. Cash flow was disrupted on a large scale since ATMs were not functional. In comparison, mobile phone networks were repaired and restored quickly. Therefore, it made sense for the authorities to explore a digital payment ecosystem that can survive post-hurricane damage.
Bahamas CBDC project Sand Dollar currently under testing
Project Sand Dollar is the name given to the Bahamas CBDC project. It is presently undergoing testing on the Abaco island. According to the central bank, a Bahamas cryptocurrency backed by the central bank can amplify the recovery rate manifold. By ensuring access to financial channels, such a CBDC project can help tide over severe hurricanes.
— Project Sand Dollar (@sanddollar_BS) January 30, 2020
Communities can quickly get back online and resume their daily life simply by using mobile-based payments. Additionally, insurance claims in a post-hurricane economy can also be cleared quickly and effectively.
The aftermath of the Dorian hurricane revealed that mobile networks could play a crucial role in payment system restoration. The central bank also acknowledged that a mobile-based Bahamas cryptocurrency digital currency could also work in a pandemic-stricken era to maintain social distancing. It can eliminate long queues at the bank branches and need to touch physical notes.