Bahamas’ currency intends to expand into digital money. The Commonwealth of the Bahamas established the Bahamian dollar (BSD) as legal tender in 1966, replacing the British Pound Sterling (GPB). The Bahamian dollar pegs to the U.S. dollar (USD) on a one-to-one basis. The Central Bank of the Bahamas started providing Bahamas currency as the official supplier in 1974.
Bahamas Announces A Central Bank Digital Currency (CBDC)
On Friday, June 22 at the Bahamas Blockchain and Cryptocurrency Conference, Deputy Prime Minister K. Peter Turnquest announced the Central Bank of the Bahamas intends to introduce a cryptocurrency into Bahamas currency. Additionally, the Commonwealth of the Bahamas plans to develop other blockchain projects to benefit the nation.
Expected benefits include providing financial services to the unbanked, reducing corruption, and stimulating and expanding the economy.
Bahamas Currency Potential Benefits
The Bahamas consists of over 700 islands, keys, and islets. Existing banking services do not reach all citizens. Crypto could solve this problem. Corruption in developing nations often takes the form of randomly overcharging citizens for basic services such as electricity or water. The immutable record of truth provided by blockchain could reduce or eliminate this problem. And the offshore banking industry already constitutes a major portion of the economy, so investment in cutting-edge technology could spur this to greater heights.
Bahamas Vendor Process
Specifically, the Central Bank of the Bahamas invites qualified organizations to submit expressions of interest (EOI) to develop a digital currency system. Based on the submissions, the bank will choose vendors who appear qualified to architect and implement a secure and reliable platform to provide a digital version of the Bahamas currency.
Qualified vendors selected by this process may then be invited to submit a detailed Request for Proposal (RFP). The Central Bank published information regarding this process in a press release on August 1, 2018. The deadline for EOI submissions ends on September 15, 2018.
CBDC Versus Traditional Crypto
Central Bank Digital Currency (CBDC) distinguishes itself from traditional crypto in a number of ways. First and foremost, CBDC maintains centralized control, whereas traditional crypto platforms such as Bitcoinand Ethereum strive for maximum decentralization. CBDC represents a nation, but crypto prides itself on functioning seamlessly across borderless.
Monetary Policy And Value
Monetary policy comes into play. The invention of Bitcoin happened during the economic turmoil of 2008. Bitcoin transactions create new Bitcoins, and these occur only once every ten minutes specifically to create new money at a steady and predictable pace. This monetary policy combats the urge by centralized banks and governments to buy their way out of financial trouble by simply printing a lot more money.
Similarly, 21 million caps the maximum number of Bitcoins that will ever be mined. Nothing prevents a government from printing as much currency as it chooses.
The value of a cryptocurrency ties directly to how useful people deem its technology to be. The value of CDBC ties directly to how affluent and stable people perceive that country to be.
Some cryptocurrencies focus on privacy and anonymity, such as Monero, Dash, and Zcash. But because of the implications of facilitating criminal activity, CDBC like that to be created for Bahamas currency would probably not implement privacy.