Local digital currency not attracting the unbanked as planned
Durrant Pate/Contributor
The Central Bank of The Bahamas estimates that 18 per cent of people in the Caribbean nation are unbanked.
This finding is based on research being carried out by the bank and its team of researchers.
The Central Bank has assessed that, if that number is reduced by 50 per cent, The Bahamas could see a reduction in economic volatility.
The bank recently published a working paper on its first Central Bank Digital Currency (CBDC), the Sand Dollar, showing that the adoption rate remains low at 7.9 per cent. The Sand Dollar was launched in the fourth quarter of 2019.
Since then, circulation has increased by a factor of three, with $303,785 in circulation as of July 2022.
While the pandemic caused a reduction in transactions and their value, wallets in use grew to more than 32,000.
Improving Sand Dollar’s acceptability
To improve the Sand Dollar’s adoption rate, Central Bank of The Bahamas researchers pointed to the imperative for commercial banks and electronic money service providers to conduct educational campaigns.
The researchers, Allan Wright, Shavonne C. McKenzie, Lance R. Bodie and Carlisa L. Belle, said: ”Town hall meetings and virtual seminars and workshops should be pursued as a means of reaching the public. Through multilateral partnerships, consumers and merchants should be engaged in a manner to ensure financial instruments are easily accessible, reliable and available for use.”
According to them, “as it relates to further areas of study, the authors expect the current initiatives being employed, coupled with these recommendations, to result in a significant increase in adoption. As The Bahamas prepares for the elimination of domestic check cashing by December 2022 and the full elimination of checks by December 2024, it is also expected that merchants and consumers will pursue more digital payment options. As the adoption rate of CBDC increases, it may be worthwhile to measure the impact of macro aggregates to note any improvements”.
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