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The ABC of CBDCs

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I’ve been talking quite a bit about CBDCs lately.


Central Bank Digital Currencies.

Central banks worldwide are looking at digital currencies as a great new future. Instead of letting citizens move to bitcoin or other cryptocurrencies, have ours. Well, that’s the idea anyway.

China was leading the way here, and has trialled a digital yuan. To encourage people to use it, the trail state gave away 10 million yuan (around $1.5 million) which, by the start of this month, had encouraged $300 million of spending across four million transactions.

I guess this is why Christine Lagarde’s first action as the new head of European Central Bank is to talk about a digital euro:

“A digital euro would be an electronic form of central bank money accessible to all citizens and firms – like banknotes, but in a digital form – to make their daily payments in a fast, easy and secure way. It would complement cash, not replace it.”


Mind you, a digital euro could be tracked and traced to whoever used it, unlike cash. Cash still has that anonymity which, in my view, is missing from any digital activity. And there is an issue.

So, it will be interesting to see what happens in the Bahamas.

The Bahamas?

Yes, the Bahamas. The first country in the world to issue a digital currency nationwide.

The Bahamas has issued a sand dollar or B$, which is the first CBDC out there in the wild. It is pegged to the USD so, in effect, this can be seen as a pilot release of a digital USD by proxy. Admittedly, the Bahamas population is pretty small – less than 400,000 people – but most Bahamians have a mobile telephone – around 90% of the population – and if you have mobile, you can make a digital sand dollar payment.

Here are a few of the frequently asked questions:

What is Project Sand Dollar?

Project Sand Dollar is the initiative embarked by Central Bank of The Bahamas to issue its own digital version of the Bahamian dollar as well as implement the appropriate digital payments system infrastructure to sufficiently underpin the operation of a digital currency ecosystem.

Why does the Central Bank of The Bahamas think we need this?

To advance more inclusive access to regulated payments and other financial services for under-serviced communities and socio-economic groups as well as to reduce service delivery costs and increase transactional efficiency for financial services across the Bahamas.

What is Cryptocurrency?

Cryptocurrency is a virtual medium of exchange that is encrypted and transmitted over distributed networks independent of any centralized entity.

What is the difference between Central Bank Digital Currency (CBDC) vs. Bitcoin and other Cryptocurrency?

Central Bank Digital Currency is a centralized, regulated, stable, private and secured unit of account and means of exchange; whereas, Bitcoin (along with other cryptocurrencies) is decentralized, unregulated, volatile in value (exchange market traded), public and unsecured unit of account and means of exchange.

Is this a cryptocurrency like Bitcoin?

No, Central Bank Digital Currency is issued and regulated by Central Bank of The Bahamas and shares the same monetary stability as the Bahamian fiat.

What is an e-wallet?

e-Wallet is a secured digital wallet that holds digital currency which can be accessed via mobile devices.

Where are Digital B$ accepted?

Digital B$ can be accepted at any merchant with a Central Bank approved e-Wallet on their mobile device.

And more info here if needed, via their press release.

Meanwhile, if you’re wondering who’s next, Cambodia is most likely the next country to issue a national digital currency.

Finally, for more debate, you can listen to the Dave Birch and Chris Skinner show, brought to you by NYPay:

The ABCs of CBDCs

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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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