Case Study on the Sand Dollar CBDC of the Bahamas: Lessons, Challenges, and Insights

1. Introduction

Experts and novices alike have been engaged in discussions regarding decentralized finance (DeFi) and financial technology (FinTech) in an effort to advance financial innovation in recent years. An issue that has received considerable scrutiny in the field of financial technology (FinTech) is the advent of digital currency and the possibility that it may have regarding financial inclusion. The subject of considerable interest is the notion of a central bank digital currency (CBDC), which has garnered considerable attention due to its potential to improve payment efficacy and diminish dependence on tangible currency.

The exploration of a digital version of their domestic currency was reported by nine out of ten central banks (CBs), according to a survey conducted by the Bank for International Settlements (BIS) in 2022 (Kosse & Mattei, 2022). Central banks in various regions are presently engaged in diverse phases of CBDC research and experimentation. As an illustration, the European Central Bank (ECB) is presently undertaking an all-encompassing examination of the prospective advantages and disadvantages of a digital euro, whereas China has initiated extensive trials of its e-CNY since 2014 (Sewall & Luo, 2022). In a similar vein, since 2017 the Swedish Riksbank has investigated the viability of the e-krona (Sveriges Riksbank, 2017).

In the midst of these investigations and trials, The Bahamas distinguishes itself through the complete implementation of its innovative Sand Dollar CBDC as of 2020. The Sand Dollar, which is now fully operational, signifies a momentous achievement in the domain of digital currencies. It is worth mentioning that Jamaica launched its own CBDC, JAM-DEX, in 2022 (Samueal & Singh, 2023). The scarcity of empirical data regarding the potential benefits and drawbacks of CBDCs can be attributed to their novelty. The effective execution of the Sand Dollar provides significant knowledge and insights that may guide the introduction of additional CBDCs on a global scale.