The Bahamas and France announced significant developments in state-led digital currency projects.
On Sept. 15. Bloomberg reported that The Bahamas plans to roll out its digital currency, the sand dollar, next month.
On the same day, Forge announced that a blockchain startup internal to European financial services firm Société Général decided to run Banque de France digital currency (CBDC) tests on the Tezos (XTZ) network
The Bahamas to—presumably—launch its digital currency before China
The Bahamas is about to beat several superpowers in the race to launch a sovereign digital currency. The digital currency in question is expected to be launched ahead of China’s digital yuan, which authorities there recently announced everyone in the country will be forced to accept.
The island nation plans to launch its own CBDC nationwide in October, after having tested it on the islands of Exuma and Abaco. Chaozhen Chen, eSolutions assistant manager for the Central Bank of The Bahamas said:
“A lot of residents in those more remote islands don’t have access to digital payment infrastructure or banking infrastructure… We really had to customize the effort and the solution to what we need as a sovereign nation.”
According to the country’s officials, the digital currency will make mobile payments easier and will particularly facilitate trade on the remote islands of the archipelago that play a big role in the local tourism-fueled economy. The system will allow CBDC-holders to make person-to-person or business transactions with their phones, even when they are offline.
People already using mobile-based digital payment systems may not notice much difference, but payment management will be much easier for the payment service providers. The reason is that once a transfer takes place “it’s final and irrevocable because it’s fiat currency,” said Keith Davies, of Kanoo, a Bahamian payment service provider testing the Sand Dollar.
There is currently only $48,000-worth of the sand dollar, which is worth one regular Bahamian dollar. That in turn is pegged to the United States dollar. New sand dollars will be minted as the demand requires, but only when physical Bahamian dollars are retired, in order to keep the money supply constant.
Lastly, the CBDC will be subject to the same money laundering and know-your-customer rules as traditional bank accounts.
France to test a digital euro on the Tezos public blockchain
As Modern Consensus reported in May, France’s central bank already tested a digital version of the euro—represented by securities digitized by Société Générale—on a blockchain developed in-house. Société Générale said at the time that the test “demonstrates the feasibility of financial securities being digitally settled and delivered in central bank digital currency for interbank settlements.”
On July 20, Banque de France selected Forge to take part in the experiment looking to trial the use of a CBDC for interbank settlement on the Tezos blockchain. The experiment will see financial securities be digitally settled and delivered in the French central bank’s digital currency to explore the feasibility of such transactions.
Other than the central bank and Forge, major Tezos-focused research and development center Nomadic Labs will also participate in the project.