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Gabriel Soderberg, Ms. Marianne Bechara, Wouter Bossu, Ms. Natasha X Che, Sonja Davidovic, Mr. John Kiff, Ms. Inutu Lukonga, Mr. Tommaso Mancini Griffoli, Tao Sun, and Akihiro Yoshinaga
Central banks are increasingly pondering whether to issue their own digital currencies to the general public, so-called retail central bank digital currency (CBDC). The majority of IMF member countries are actively evaluating CBDCs, with only a few having issued CBDCs or undertaken extensive pilots or tests. This paper shines the spotlight on the handful of countries at the frontier in the hope of identifying and sharing insights, lessons, and open questions for the benefit of the many countries following in their footsteps. Clearly, what can be gleaned from these experiences does not necessarily apply elsewhere. The sample of countries remains small and country circumstances differ widely. However, the insights in this paper may inspire further investigation and allow countries to gain time by building on the experience of others. Importantly, the purpose of this paper is not to evaluate the courses taken by different jurisdictions, but to study and discuss their key experiences and lessons. The paper studies six advanced CBDC projects, drawing on collaboration and exchanges with the respective central banks to get insights beyond what has previously been published. Unless a specific published source is cited, all information stems from interviews and workshops with members of CBDC project teams in each jurisdiction.
Steve Dorst

, there is one constant: there was an enabling environment for these initiatives to germinate and quickly become reality. The end result? Innovative, homegrown initiatives that help millions of under-served people be financially included and have a better shot at prosperity. The Bahamas: first digital currency In October 2020, The Bahamas leapfrogged into the digital vanguard with the launch of the world’s first central bank digital currency—the sand dollar. Pegged one-to-one to the Bahamian dollar and using a blockchain-backed digital token, the new currency is

International Monetary Fund. Communications Department

. Central banks all over the world are now exploring their potential benefits, including how they improve the efficiency and safety of payment systems. As of July 2022, there were nearly 100 CBDCs in research or development stages and two fully launched: the eNaira in Nigeria, unveiled in October 2021, and the Bahamian sand dollar, which debuted October 2020. Countries have different motives for exploring and issuing CBDCs, but in the case of The Bahamas, the need to serve unbanked and under-banked populations across more than 30 of its inhabited islands was a primary

Gabriel Soderberg, Ms. Marianne Bechara, Wouter Bossu, Ms. Natasha X Che, Sonja Davidovic, Mr. John Kiff, Ms. Inutu Lukonga, Mr. Tommaso Mancini Griffoli, Tao Sun, and Akihiro Yoshinaga

and testing CBDC, such as organizational choices and staffing. It also includes insights identified as particularly important by the jurisdictions themselves on the way forward. Box 1. Current Status of CBDC Projects CBOB, Sand Dollar : The Sand Dollar was officially launched in October 2020. In late 2021, there were around 20,000 active Sand Dollar wallets in a population of about 400,000, and functions are continuously being developed. BOC : The BOC has not found a pressing case for a digital currency given the present state of the Canadian payments

International Monetary Fund. Western Hemisphere Dept.

currency, and improve the governance arrangements between the CBoB and the government. Further, the Banks and Trust Companies Act 2020 now establishes a framework for bank resolutions and liquidations, while the Protection of Depositors (Amendment) Act 2020 has been revised to improve the governance of the Deposit Insurance Fund (DIF). Central Bank Digital Currency Following extensive research, public and international consultation, as well as a successful pilot in 2019, the Sand Dollar was launched nationwide in October 2020. The broader aim of the digital

Gabriel Soderberg, Ms. Marianne Bechara, Wouter Bossu, Ms. Natasha X Che, Sonja Davidovic, Mr. John Kiff, Ms. Inutu Lukonga, Mr. Tommaso Mancini Griffoli, Tao Sun, and Akihiro Yoshinaga

( 1 ) : 92 – 114 . CBOB (Central Bank of Bahamas) . 2019 . “ Project Sand Dollar: A Bahamas Payments System Modernisation Initiative .” Sand Dollar Whitepaper , Central Bank of the Bahamas . Central Banks and BIS . 2020 . “ Central Bank Digital Currencies: Foundational Principles and Core Features ”. Joint report by Bank of Canada, European Central Bank, Bank of Japan, Sveriges Riksbank, Swiss National Bank, Bank of England, Board of Governors Federal Reserve System and Bank for International Settlements . Central Bank Act of The Bahamas

International Monetary Fund. Western Hemisphere Dept.

, 2018–26 4 Summary Accounts of the Central Bank and the Financial System, 2018–26 5. Financial Soundness Indicators for the Banking System, 2012–19 ANNEXES I. Past Policy Advice II. Implementation of Key FSAP Recommendations III. External Sector Assessment IV. Risk Assessment Matrix V. Public Debt Sustainability Analysis VI. The COVID-19 Pandemic VII. Social Spending and the COVID-19 Pandemic VIII. The “Sand Dollar” IX. Introducing Mandatory Property Insurance Front Matter Page THE BAHAMAS STAFF REPORT FOR THE 2020 ARTICLE

International Monetary Fund. Western Hemisphere Dept.

to Natural Disasters and Climate Change C. Safeguarding Financial Stability D. Maintaining Monetary Stability E. Enhancing Competitiveness F. Investing in Data AUTHORITIES’ VIEWS STAFF APPRAISAL BOXES 1. The Fiscal Responsibility Law (FRL) and Other PFM initiatives 2. Building Resilience to Natural Disasters 3. Project Sand Dollar FIGURES 1. Real Sector Developments 2. Fiscal Developments 3. Financial Sector Developments 4. External Sector Developments 5. Doing Business Indicators TABLES 1. Selected Social and

International Monetary Fund. Western Hemisphere Dept.

Document (Grey List). However, as the visit was delayed due to COVID-19, The Bahamas was placed on the European Union’s ‘AML Blacklist’ in October 2020. The FATF completed its inspection in November and removed the Bahamas from its Grey List in December. 39. The CBOB officially launched the “Sand Dollar” digital currency (CBDC) to all residents on October 20 . The Sand Dollar will allow previously unbanked parts of the population to participate in digital payments and enhance the payment system’s efficiency and resilience considering The Bahamas’ vulnerability to

International Monetary Fund. Western Hemisphere Dept.

deteriorated sharply. They also called for amendments to the Central Bank Act to safeguard its independence. Directors recognized the potential of the Sand Dollar to foster financial inclusion and recommended that the central bank accelerate its education campaigns and continue strengthening internal capacity and oversight. A robust supervisory and regulatory framework for the growing virtual assets sector would also be important. Noting the resilient financial sector, Directors highlighted the importance of further strengthening bank recovery and resolution and the AML