LONDON:”Bahamas Regulates Banks for CBDC Offering”, The Bahamas, the first country in the world to issue a central bank digital currency (CBDC), is now preparing regulations that will require commercial banks to provide access to the e-money in a bid to stimulate adoption, its central bank governor told Reuters.
The Bahamas’ role as a CBDC pioneer – it issued its “Sand Dollar” digital currency in 2020 – means that what it does in the Caribbean is closely watched by the more than 130 countries, from Europe to China, that are now exploring digital versions of their currencies.
John Rolle, the islands’ central bank governor, who oversaw the Sand Dollar’s launch nearly four years, said with take-up still limited, carrot was turning into stick and commercial banks were now being told of regulations that will effectively force them to distribute it.
“We’ve begun to signal that to our institutions,” Rolle told Reuters during a trip to London, indicating that regulatory guidelines should be established within the next two years. He emphasized the need for clear rules to govern the implementation process of the new policies.
“We foresee a process where all of the commercial banks will eventually be in that space and they will be required to provide their clients with access to the central bank digital currency.”
CBDCs have proven a point of contention between central and commercial banks, with banking lobby groups warning that the currencies could encourage deposit flight because they effectively offer the public a central bank bank account.
The European Central Bank has signalled it will make it mandatory for euro zone retailers and banks to accept and distribute a future digital euro if it goes ahead, but that is still years away, meaning the Bahamas would be first once again.
