Sand Dollar Initiative: How To Improve Access to Financial Services in the Bahamas

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Central banks are concerned about the global demand for cryptocurrencies, claiming that digital currencies may undermine their monetary policy. Unlike fiat currencies, which are supported by monetary policy and legal tender status, the value of cryptocurrencies is simply based on the premise that people would value and utilize them. given a consequence, price volatility has been severe, given that the value of crypto assets mostly relies on unproven concepts.

In reaction to the danger of cryptocurrencies to the banking system’s survival in the financial industry, the banking system has been inventive. They have not, however, been complacent in the face of tremendous rivalry. Instead, established financial institutions have begun to deploy central bank digital currencies (CBDC) or digital fiat money. This is an endeavor by central banks to stay competitive in a fragmented economy and to maintain their status as financial sector economic giants.

The Central Bank of The Bahamas (CBOB) is one such bank that has developed its own digital currency. On October 20, 2020, it will adopt the Sand Dollar, becoming the first country in the world to implement a nationwide CBDC. CBDCs help central banks stay relevant by offering more trustworthy and stable units of account than crypto assets. They also make central bank money appealing as a payment method in the digital economy.

This article will explain the Bahamian central bank digital currency (CBDC), the Sand Dollar, its purposes, and why it was created.

The Bahamian Sand Dollar: What Is It?

The Sand Dollar is a centralized, controlled, stable, private, and safe unit of account and means of exchange issued by The Bahamas’ central bank. The Sand Dollar is a central bank obligation directly backed by foreign reserves. Cryptocurrencies, on the other hand, are privately issued or minted. They may or may not be backed by any underlying asset or represent the obligation of any government or central authority.

The Sand Dollar is a digital replica of the Bahamian dollar, The Bahamas’ legal money. It is subject to stringent rules as a CBDC and is backed by foreign reserves, assuring its stability and value. This implies that consumers may be certain that the Sand Dollar will hold its value over time and can be used for transactions similar to cash.

Cryptocurrencies are not issued by any central body or government and are not subject to any rules. Other assets or currencies may back them, but their value is not guaranteed and may fluctuate dramatically. As a result, they are less trustworthy as a medium of trade and store of value when compared to CBDCs such as the Sand Dollar.

Background on the Sand Dollar initiative

The Sand Dollar initiative was founded on the Bahamian Payments System Modernization Initiative (PSMI), which started in the early 2000s. The effort aims to improve financial inclusion and fair access to financial services by improving the domestic payments system’s efficiency.

Exuma Island was the first to introduce the Bahamian Sand Dollar (B$) in 2019, followed by Abaco in February 2020. The Sand Dollar was introduced in response to a targeted baseline assessment on financial inclusion and access undertaken for Exuma in the summer of 2019. According to the poll, Bahamians have a high mobile phone use and a significant desire to use digital financial services.

Furthermore, after Hurricane Dorian’s devastation to Abaco in September 2019, the pilot program was expanded to investigate the viability of emergency wireless communications capabilities for financial services recovery.

The Sand Dollar initiative is an important step toward upgrading The Bahamas’ financial services industry. The Sand Dollar, a centralized, controlled, stable, private, and safe unit of account and means of trade, has various advantages over conventional forms of money. For example, it makes it easier and more inclusive for Bahamians to engage in the official financial system, especially in locations where conventional banking services are unavailable.

Features of Bahamian Sand Dollar

The Sand Dollar project aims to improve access to financial services, focusing on inclusivity, convenience, and security. Here are some key features of the Bahamian Sand Dollar:

  • Transactions: Transactions will be validated almost instantaneously, ensuring real-time transaction processing. This feature will minimize transaction time, providing customers with a faster and more efficient payment system.
  • Sand Dollar supports offline functionality: Businesses accepting payments will be supported through fintech-tailored solutions, enabling them to process payments using modern credit and debit card machines or mobile phone apps. This feature will enable businesses to provide customers with a convenient and secure payment experience.
  • Transactions will be fully auditable: Every transaction will be recorded and traceable. Transactions monitoring will still protect user confidentiality and be governed by strict regulatory standards around access. This feature will enhance transparency and accountability in the payments system.
  • Security: Fraud detection will be monitored, enabling the system to detect and prevent fraudulent transactions. This feature will enhance the security of the payments system and safeguard against fraud.
  • The digital currency will only be restricted to domestic use, prohibiting non-domestic payees’ acceptance. However, through AFI’s, wallet holders will still have the option to integrate bank accounts to make electronic purchases of foreign exchange, enabling the use of their accounts internationally. This feature will protect the integrity of the Bahamian CBDC.
  • Users are required to provide multifactor authentication to complete some payment transactions. This feature will enhance the security of the payments system by requiring users to supply two randomly generated passcodes to complete payment transactions.
  • The system design will incorporate a digital ID solution using KYC and identity features. This solution can be piloted in the financial services sector, providing a secure and reliable identification system.

How does one use a Sand dollar in the Bahamas?

In collaboration with NZIA Limited and Norton Rose Fulbright, the Bahamas Central Bank has created the Sand currency, a digital counterpart of the Bahamian currency. This central bank digital currency (CBDC) uses a hybrid technology solution that combines cutting-edge technological platforms with legal, risk, and policy expertise.

Cortex, a centralized command and control program, manages all parts of the CBDC issuance process, including movement, compliance, ecosystem involvement, risk management, use, and end-user accessibility. Prepaid Mastercards and two kinds of eWallets, Tier I and II, are available to Bahamians.

Tier I eWallets have a $500 holding limit and a $1500 monthly transaction limit, whereas Tier II eWallets have a $8000 holding limit and a $10,000 monthly transaction limit. Tier I eWallet users are not required to go through any consumer due diligence processes, but Tier II eWallets need risk-based identity checks.

Furthermore, Tier III wallets with no transaction restrictions are accessible to enterprises, charities, and other corporate organizations. Transactions between the payers and payees eWallets may be performed instantly because prepaid cards or digital wallets carry central bank money based on distributed ledger technology.

The Sand Dollar initiative is an important step toward modernizing the Bahamian financial system, providing consumers and companies with a safe, efficient, and accessible CBDC system.

Benefits of Bahamian Sand Dollar

Here are some of the benefits of the Sand Dollar:

  • Financial Inclusion: The Sand Dollar provides a digital payment solution to people with limited access to traditional banking services. With the Sand Dollar, users can transact using a mobile app without requiring a bank account. This is particularly beneficial for people living in remote areas of The Bahamas who may not have easy access to physical banking services.
  • Cost-Effective: Using Sand Dollar eliminates the need for physical cash, reducing printing costs and managing cash. Additionally, it provides a cheaper and faster alternative to traditional banking methods like wire transfers, which can be expensive and slow.
  • Increased Security: The Sand Dollar is built on a blockchain-based platform, which provides an immutable record of all transactions. This makes it harder for fraudsters to carry out fraudulent activities such as counterfeiting or double-spending. In addition, the digital nature of the Sand Dollar makes it less susceptible to theft or loss, which can occur with physical cash.
  • Enhanced Monetary Policy: The Sand Dollar gives the Central Bank of The Bahamas greater control over the country’s monetary policy. The Central Bank can monitor the usage of the currency and adjust its supply to control inflation and maintain its stability.
  • Improved Efficiency: The Sand Dollar offers a faster and more efficient payment method than traditional banking systems. Transactions can be processed in real-time, which reduces settlement times and eliminates the need for intermediaries.

Sand Dollar’s Promising Future

The Central Bank of the Bahamas (CBOB) has taken an important step in increasing financial inclusion and access to financial services in the Bahamas by developing a blockchain-based central bank digital currency (CBDC) solution that meets the demands of the Bahamian people. The Sand Dollar has garnered broad acceptance among companies, financial institutions, and consumers in less than a year.

Despite its quick acceptance, according to the London School of Economics Research, Sand Dollar balances climbed by less than $300,000 between January 2021 and June 2022. In contrast, the value of notes climbed by $42 million, indicating that the Sand Dollar is still not widely accepted as a form of payment. This highlights the need for education and awareness programs to improve Bahamians’ knowledge of the advantages and use of digital payments.

Adopting new technology is not always optimal for policymaking or commercial investments until an objective analysis of alternatives is performed. The Sand Dollar digital currency is still in its early stages. It will need constant improvements in Bahamian payment and banking infrastructure before it can be widely embraced as a CBDC.

The CBOB created a CBDC solution in response to the need for increased financial inclusion in the Bahamas, where many citizens were unbanked or underbanked. The Sand Dollar was created as a digital replica of the Bahamian dollar, allowing for quicker, cheaper, and more secure transactions while expanding access to financial services. By using blockchain technology, the Sand Dollar delivers transparency, security, and immutability, increasing confidence in the financial system.

The Sand Dollar’s fast acceptance among companies, financial institutions, and consumers in less than a year demonstrates its success. Many companies and vendors in the Bahamas, including retail establishments, petrol stations, and restaurants, have welcomed it and taken Sand Dollars as payment. Sand Dollar payments have also been incorporated into the services of financial organizations like banks and credit unions, making it simpler for clients to access and transact with their cash.

However, the delayed acceptance of Sand Dollars as a payment method among Bahamians highlights the need for education and awareness initiatives to promote the advantages and use of digital payments. The CBOB has responded by starting a public education effort to raise awareness of the advantages and use of the Sand Dollar. The program involves outreach to under-banked and unbanked areas, promoting the simplicity and security of digital payments.


The Sand Dollar is a digital currency issued by the Central Bank of The Bahamas, making it the world’s first country to use a CBDC. The Sand Dollar is backed directly by foreign reserves, which ensures its stability and worth. It is a digital counterpart of the Bahamian dollar that is regulated strictly, giving it a more trustworthy and stable unit of account than cryptocurrencies.

With critical features such as real-time transaction processing, offline functionality, auditable transactions, fraud detection, and security measures such as multifactor authentication, the Sand Dollar project aims to improve access to financial services while focusing on inclusivity, convenience, and security.

Digital money is only available for domestic usage, and users must obtain KYC and identification verification. It is available to businesses and consumers via fintech-tailored solutions such as credit and debit card terminals and mobile phone applications.

The Sand Dollar initiative is an important step toward modernizing The Bahamas’ financial services industry, increasing financial inclusion and access to financial services even in locations where regular banking services may not be accessible.


What is the Sand Dollar?

The Sand Dollar is a digital currency issued by the Central Bank of The Bahamas, making it the first country globally to deploy a national CBDC.

Do foreign reserves back the Sand Dollar?

The Sand Dollar is directly backed by foreign reserves, ensuring its stability and value.

What are some benefits of using the Sand Dollar?

The Sand Dollar provides convenience, security, transparency, fraud detection, real-time processing, and offline functionality.

How can I use the Sand Dollar?

Businesses and customers can use the Sand Dollar through fintech-tailored solutions, such as credit and debit card machines and mobile phone apps.

Is the Sand Dollar only restricted to domestic use?

Yes, the Sand Dollar is restricted to domestic use, and users must provide Know Your Customer (KYC) information and identity features.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Micah Abiodun

Micah is a crypto enthusiast with a strong understanding of the crypto industry and its potential for shaping the future. A result-driven Chemical Engineer (with a specialization in the field of process engineering and piping design), Micah visualizes and articulates the intricate details of blockchain ecosystems. In his free time, he explores various interests, including sports and music.

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