Since the rise of cryptocurrencies, the world has witnessed a shift in how money can be used. While not everyone is on board with using crypto in their daily lives, businesses or investment portfolios, the world can agree on the vast benefits that the industry provides.
In an attempt to utilize these benefits, banks around the world have been exploring CBDCs (central banking digital currencies). These centralized stablecoins are digitized currencies pegged to the local fiat currency and are managed by the bank in that region.
Several countries around the world have been working on researching and implementing these, including China, Australia and Sweden. In the latest wave of CBDC adoption, the Bahamas and Nigeria have launched their own versions of a local digitized currency, becoming part of a select few countries to move past the pilot program stage.
The Bahamas Launch The “Sand Dollar”
On 20 October, the Bahamas became one of the first countries to roll out a CBDC. Project Sand Dollar officially launched by making the virtual currency available to all 393,000 residents of the country through mobile devices.
Making use of transaction provider NZIA’s technology solutions, the Sand Dollar currency can be used at any merchant with a Central Bank approved e-Wallet. The currency also boasts “negligible” transaction fees. The Sand Dollar is pegged to the Bahamian Dollar, which is roughly around the same value as the US dollar.
The project was first launched in 2019, when the Central Bank of The Bahamas launched the pilot program to the residents of Exuma and Abaco, releasing 48,000 Sand Dollars. The project is designed to increase transactional efficiency, making a digital monetary ecosystem for residents of the 700 islands that make up the country.
The wallets are segregated into three tiers, each tier requiring different KYC/AML verifications and each with its own limits. This service is only available to residents of the country and is not available to foreigners or non-residents.
Nigeria Launches Its Own CBDC, The eNaira
On 25 October, President Muhammadu Buhari announced that Nigeria’s CBDC had officially launched. This comes just eight months after outright banning the use of cryptocurrencies by financial institutions.
Titled the eNaira, the digital currency is now available to the country’s population of 211 million, of which 62.8% are below the age of 24. With a largely young and tech-savvy demographic, the digital currency is being closely watched by digital currency enthusiasts around the world.
Developed by fintech company Bitt, the local digital currency network is provided through two apps, the eNaira speed wallet and eNaira merchant wallet, both conveniently available through the Google and Apple app stores.
The first phase of the launch is only available to Nigeria’s BVN bank account holders with the second phase opening to Nigerians with national identity NINs. The latter is reported to have 60 million sign ups at the time of launch.
Central bank Governor Godwin Emefiele confirmed that 500 million eNaira ($1.21 million) had been minted for the launch. It is also reported that 33 banks have joined the platform, and that transaction fees are free of charge for the first 90 days.
Chasing financial inclusion and a faster monetary ecosystem, the digital currency is available for local and international trade.
Global CBDC Development
Many other countries are in the process of testing CBDCs, with China currently implementing the pilot program to its digital yuan in several states. Cambodia has also launched a pilot program, with Ghana, South Korea and Israel following closely behind.