Dual Currency coming
Finally here are the possible details on what a CBDC will look like. Read closely if you want to get ahead of the game on what to expect.
Smaller countries are more flexible than larger ones. So we should not be surprised to see the first CBDC in a third world country who has many first world advantages like health care, & technology and much of the infrastructure a first word country has.
The Central Bank of the Bahamas has confirmed it is moving ahead with the nationwide launch of its digital currency, called the “Sand Dollar,” sometime in October. Approximately $48,000 worth of the new central bank digital currency (CBDC) — pegged to the U.S. dollar-tracking Bahamian dollar (BSD) — will enter circulation initially with commitments to mint and remove BSDs as necessary. A mobile-based wallet app will also be rolled out. If it sticks to its October release, the Sand Dollar will likely become the first CBDC to launch anywhere in the world — it has been suggested China won’t launch its own digital yuan initiative until the Beijing Winter Olympics in 2022, CoinDesk’s Paddy Baker reports.
This could even be seen as self defense. As their current dollar, the BSD is pegged to the US dollar. And with the massive government spending combined with our weakening economy, Many speculate the dollar will lose it buying power.
If the launch in October, their SAND dollar (cute eh?), goes forward they will be the first CBDC anywhere (as far as I know). Given that the Bahama are a set of islands, a digital currency with a mobile wallet probably enables better service to their people than planet brick and mortar bank building on each location their people want services. Island to island transfer of paper money to distribute is an obvious draw back to the current fiat system.
It sounds like this project was started back in June of 2018 .
This Sand dollar and mobile wallet was released on Dec 27 2019. So it is already in place! https://iclg.com/ibr/articles/10668-nzia-implements-digital-currency-for-central-bank-of-the-bahamas
I assume it is being step by step rolled out to islands and debugged. The goal this year seem to be to complete the rollout to everyone.
So just what is in this tech? How much of the original block chain ideas are still in it?
Beside being wireless. More information was not so easy to gleen.
They retained the international law firm Norton Rose Fulbright so it probably conforms to all FATF regulations with all the centralized controls of censorship, black listing and tracking in place. https://www.nortonrosefulbright.com/en-ca/news/88ecc514/norton-rose-fulbright-advised-nzia-limited-on-the-creation-of-a-central-bank-digital-currency
To start, the Digital Sand Dollar is exactly equal to their current currency and it backed by the Banks reserves. They mean to begin the elimination of of their fiat currency. The currency will be minted/created by the central bank. How one monitors how munch has been created is not obvious. And goes beyond the scope ad interest of those reporting so far.
They say it is not anonymous but is confidential. Think they/this mean transactions are encrypted for privacy but wallets are given by some ID/KYC process.
https://bitcoinist.com/bahamas-races-ahead-with-digital-currency/
Given the involvement of the international law firm. I would not be surprised if this is a trial run at implementing a digital currency with an eye towards integration in the global currency world for trade (thus foreign exchange functions). I see This is as an experiment being monitored for a lessons learned type of project that does not risk a first world currency.
According to this, https://davidgerard.co.uk/blockchain/2020/09/11/central-bank-digital-currency-bahamas-sand-dollar-eastern-caribbean-dcash/ the Sand dollar Distrubuted Ledger Trechnology (DLT) is based on IBM’s Hyperledger blockchain.
But here, they say it is not a crypto currency. https://www.coindesk.com/the-bahamas-will-launch-a-digital-currency-pilot-tomorrow Bankers said “Sand Dollar” is a “digital fiat currency” — not a cryptocurrency, stablecoin or competitor to the Bahamian dollar. Instead, it is simply a digital version “equivalent in every respect to the paper currency,” they said in the project outline.
The most interesting to me are the wallet limits imposed…
“A widely adopted CBDC would place users at less risk of violent crimes that target holders of cash, and potentially reduce security and insurance costs associated with keeping cash on business premises,” according to the outline.
For now, however, the sand dollar faces far more restrictive limits from the government. Businesses cannot hold more than B$1 million in their digital wallets, nor can they transact more than one-eighth of their annual business through the wallets in any given month. And individuals max out at B$500, with higher limits coming through “enhanced due diligence” on their accounts.
NZAI, a Bahama native group/company was contracted to create the system with help of IBM and a block chain group in Asia.
The scant info available on NZAI’s website on the digital currency points to a hyper ledger system as the solution they used. blockchain hardware nodes, edge processing capability and the NZIA Cortex DLT. https://nzia.io/ Nodes, edge processing and DLT all fit the capabilities of the hyperledger system. But there is not enough info to be 100% confident what this system is.
Hyperledger was an IBM project for a high speed open source blockchain.
Open source just means it was built on top of of the linux operating system and has it’s own organization at hyperledger.ORG that I assume is the holder of the base code and then collaborates with the customer on what flavor of hyperledger will fit best with their needs.
A quick look at their member list read like a who’s who of international corporations (U.S. and foreign). https://www.hyperledger.org/about/members
I gave up trying to understand the technical details. But we can understand the current on-ground implementation.
There are 3 different wallets. Each is related to a higher KYC requirement. The basic only asks for email & pohone number but no photo and restricted to $500 balance and 1500 a month in transactions. The next level up adds the photo ID requirement to get the $5000 balance and $10,000 transaction limits. The next level (businesses mostly?) up requires tax filing records and licensing records. The high worth individual has to prove their wealth to meet this level.
This does allow a more inclusive system than the previous system. While getting the gov’t the tracking and control they want. There are clearly “some” benefits for the population but even more for the Gov’t and central bank!
I still remember my dad being skeptical of debit cards and electronic money while I, a college senior, thought they were great. Having more experience than I, he knew an advance like that gave some advantage the banks wanted while they SOLD me on the new convenience it gave me. I was excited about ATM and getting cash without going to the bank during bank hours and being able to swipe my debit car at vendors and not carry cash. My dad? He turned 180 and then structured his life to use cash as much as possible. He never got a debit or credit card. Now I understand him, As I see another wave of change. A benefit to the people to sell it,…. but more control to those at the top who control money.
I see this as the model that will be implemented in other countries. And am already thinking about how one works with it to maximize privacy. For example starting out with a basic wallet with minimum KYC. But at some point, after waiting as long as I can,…. getting a next level wallet for the occasional larger transactions. Restricting how to transfer fund between wallets seems to be what banks will do to keep track of transactions KYC/AML style. Could we see DEX’s that do that for us? I’ll bet so. A “black” market always develops to serve a need (legal or not). I’ld like to wait to get the wallet above basic until after DEX’s are created to serve private exchanges from the basic wallet to higher wallet. Even better, is wait until cryptos are mainstream and never deal with a CBDC.