Plans are underway in the Bahamas to launch its central bank digital currency (CBDC), the Sand Dollar, in October 2020. In our conversation with Cleopatra Davis and Chaozhen Bobby Chen, of the Central Bank of The Bahamas, we learn, among other things, more about the Sand Dollar, how it will better serve the unbanked and underbanked, and how the Bank intends to manage the KYC and AML requirements for this new currency.
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Over the past few years, there has been a buzz in the Caribbean region’s fintech space – be it Bitcoin, cryptocurrencies, blockchain technology, and sandboxes, to name a few. To some degree, the palpable excitement has dissipated, but countries and individuals are trying to develop innovative fintech-related products and services, which many be used not only in the region, but also further afield.
Recently, a number of Caribbean countries have either started projects, or have expressed an intention, to develop their own digital currency. However, the Bahamas has been first out of the gate, with a digital currency, backed by the Central Bank of The Bahamas, called the Sand Dollar.
The Sand Dollar is a digital version of the Bahamian Dollar, and since December 2019, it is being piloted in Exuma, which was then extended to Abaco. However, the plan is Io formally launch the Sand Dollar in October this year, and make it more widely available across the Bahamas.
Although many of us might rarely use cash, are rely upon credit cards, debit cards, and other digital services almost exclusively, conducting transactions using a digital currency is not yet the norm. However, cognisant of the focus of many countries, especially across the Caribbean region, to develop their own digital currencies, their use are likely to become more commonplace in the not-too-distant future.
With the imminent launch of the region’s first Central Bank-backed digital currency, we thus thought it opportune to explore digital currencies, and the Sand Dollar in particular, and to learn from the experience of the Central Bank of The Bahamas.
Introducing our guests
Cleopatra Davis is the Head of Banking, at the Central Bank of The Bahamas, where she has oversight of payments operations, foreign investments, domestic debt market activities, and eSolutions. She is also the co-chair for a dynamic payments modernization – digital fiat currency – strategic initiative undertaken by the Bank. Further, she serves on other committees of the Bank, including the Investment Committee and Monetary Policy Committee.
Cleopatra is a member of the global Alliance for Financial Inclusion (AFI), Digital Financial Services (DFS) Working Group, and a member of the DFS Gender Diversity sub-committee. She is a Chartered Banker MBA (MCBIS), a Certified Internal Auditor (CIA), and a Certified Financial Services Auditor (CFSA). She also possesses certification in Risk Management Assurance (CRMA), and is a Certified Information Systems Auditor (CISA).
Chaozhen Bobby Chen is the the Assistant Manager eSolutions, at the Central Bank of The Bahamas. He is passionate about financial technology and digital innovation, and has been an active alternative securities investor and a fervent advocate to introduce blockchain technology to the Bahamas.
Bobby graduated Summa Cum Laude from Purdue University in Accounting, Finance and Business Management. He began his career in US tax advisory with EY (formerly Ernst & Young), one of the “Big 4” firms in professional services, and is also a Chartered Alternative Investment Analyst and a licensed Realtor in the Bahamas. He Is fluent in three languages – Spanish, Chinese and English – which has allowed him to build a broad range of international experience.
Insight into our conversation
A central bank digital currency (CBDC) is now ground for us here on the ICT Pulse Podcast. Previously, we have had discussions on cryptocurrencies, blockchain technology, and more generally fintech, but we feel lucky to learn more about – and to be able to share with you – a new digital currency before its official launch next month.
Cleopatra and Bobby were generous with their time, and allowed us to start from the basics, and then delve a bit deeper on critical aspects of the Sand Dollar and its operation. Key questions that were posed to Cleopatra and Bobby included the following:
- What is a digital currency, and how is it different from fiat money?
- How is a digital currency different from when one transact digitally, such as using a credit card or debit card?
- What was the impetus for the Bahamas to develop its own digital currency?
- Based on the pilot of the Sand Dollar, what have been some of the results of the pilot?
- How receptive have the commercial banks been to the Sand Dollar?
- How receptive have people been to this currency?
- How will the Sand Dollar be integrated into the existing monetary system?
- What technologies will be required to integrate with other banks and with the wider financial system?
- How does the Bank want or expect the Sand Dollar to be used, and what is the anticipated impact on the Bahamas and its economy?
- Will the Sand Dollar be accessible by the underbanked and unbanked in the Bahamas?
- With regard to transactions with the Sand Dollar, how are Know Your Customer (KYC) and Anti-Money laundering (AML) requirements being managed?
- It seems as if the Bahamas was able to barrel through the development of its CBDC. What advice would it give other countries/Central Banks that want to roll out a CBDC?
We would love to hear from you!
Do leave us a comment either here beneath this article, or on our Facebook or LinkedIn pages, or via Twitter, @ICTPulse.
Select links
Below are links to some of the organisations and resources that either were mentioned during the episode, or otherwise, might be useful:
- Chaozhen Bobby Chen
- Central Bank of The Bahamas
- Publication, PROJECT SANDDOLLAR: A Bahamian Payments System Modernization Initiative
Image credits: Wikipedia Commons; C Davis; C,. B. Chen
Music credit: Ray Holman
