By NEIL HARTNELL
Tribune Business Editor
The Central Bank’s governor has revealed that the Family Island communities where it will test the first version of a digital Bahamian dollar will be selected before the end of April 2019.
John Rolle, pictured, responding to Tribune Business’s questions, said the regulator expects to have “the piloted version” in use by next year after selecting NZIA Ltd from among 30 bidders to be the preferred technology solutions provider for the digital currency.
NZIA, a joint venture between IBM and a Singapore-based software company specialising in blockchain solutions, will now be tasked with designing and implementing “the digital fiat currency system for The Bahamas”.
Mr Rolle said the digital Bahamian dollar, whose creation has been given the name Project Sand Dollar, will be rolled-out beyond the test communities after 2020. It is a key element in the Central Bank’s drive to modernise The Bahamas’ payment system, and moving consumers away from an historical reliance on cash to electronic payments.
Asked when the regulator plans to select which communities will be used to test the digital Bahamian dollar, Mr Rolle replied: “The communities will be identified before the end of April.
“We have set a target of 2020 for the piloted version of the currency to be in use. Expanding beyond the pilot will happen after 2020.”
He revealed that the Central Bank received 30 responses to its original Expression of Interest (EOI), with the field ultimately reduced to six shortlisted finalists from which emerged NZIA Ltd.
“We had 30 responses to the EOI invitation,” Mr Rolle confirmed. “After the first evaluation a shortlisted set of six were invited respond to the detailed Request for Proposals or RFP. NZIA proposed the most comprehensive technology solutions according to the specifications of Project Sand Dollar’s RFP requirements.”
The Central Bank and NZIA Ltd now have to finalise commercial terms and the scope of the latter’s work. Mr Rolle provided no details on this or the likely length of negotiations, but said the project was intended to ensure Bahamians - especially those in remoter Family Island communities - maintain access to financial services via electronic means,
“Project Sand Dollar expects to deliver digital payments infrastructure that reduces service delivery costs of physical cash, increases transactional efficiency and improves the overall level of financial inclusion in communities throughout the Bahamas,” the Central Bank governor said.
This echoed the regulator’s release on the NZIA Ltd selection, which said: “The Central Bank expects that at the conclusion of this project all residents in The Bahamas will have equal, expanded access to modernised digital payments capabilities. A concurrent reduction in cash transactions is also expected
“Appropriate policy and legislative reforms will accommodate the functional aspects of a digital currency. The draft Central Bank of The Bahamas Bill, 2019, now before the Government, anticipates this framework, and will provide for the development of regulations to govern the instrument.
“The regulatory framework will include safeguards to satisfy exchange control regulations; monitoring and controls against money laundering and terrorist financing; and specifications to ensure complementarity as opposed to material substitutability for existing banking services.”
The Central Bank, in an Expression of Interest (EOI) tender unveiled last August, which sought bids for the design and implementation of a digital currency, said it was targeting the launch of an electronic Bahamian dollar by 2021. Mr Rolle’s comments indicate it is still very much on track to hit this timetable.
The regulator added that it was aiming to roll-out a trial version “within 30 months”, with the move central to its efforts to “accelerate” payments system modernisation and introduce technology-based financial services (fintech) to reduce Bahamians’ reliance on cash and combat the loss of physical bank branches as institutions withdraw from the Family Islands.
The Central Bank’s EoI document suggested it was becoming “increasingly less feasible” for commercial banks to provide a physical presence in sparsely populated islands. The solution to “financial inclusion”, it added, was through the provision of electronic and digital payment services, possibly using technology such as blockchain.