The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The digital Bahamian dollar’s technology provider yesterday pledged to “open up” opportunities for local start-ups and financial operators, and promised: “We won’t be greedy.”

Jay Joe, NZIA Ltd’s chief executive, said the network infrastructure it will construct to facilitate the fiat currency’s nationwide roll-out can provide the platform for existing banks, payments solutions providers and future market entrants “to create new services around the CBDC” (Central Bank digital currency).

Speaking as NZIA formally sealed its partnership with the Central Bank for the digital Bahamian dollar’s development, Mr Joe said the company’s work would “augment” - rather than “disrupt” - current financial services providers and their business models.

Describing the digital Bahamian dollar’s creation as “an historic project not just for the Bahamian people but on a global level”, he added that the initiative will “not succeed” if NZIA - a joint venture between IBM and a Singapore-based software company specialising in blockchain solutions - tries to hog all the work for itself.

“When you look at typical Central Bank digital currency (CBDC) projects, a lot of companies try to position themselves to build the whole caboodle, and we’re not into that,” Mr Joe said.

“We’re going to build the infrastructure component, build the back-end, and open the front-end to local technology start-ups, banks, to create new services around the CBDC. This is a key aspect of making this a living, breathing thing that people engage with.

“If we try to be too greedy with this it will not succeed. We want to open the front-end for people to build solutions and services not thought of. There’s a lot of creativity out there and we want to foster that. This is the right way to do it.”

NZIA Ltd was selected as the preferred technology solutions provider for the digital Bahamian dollar’s creation, and roll-out, in early March this year, and yesterday’s contract signing with the Central Bank triggers the “ramp up” of both sides’ efforts to launch the “pilot project” on Exuma.

John Rolle, the Central Bank’s governor, said Exuma residents should be using the digital version of the Bahamian dollar before year-end, with the product launched in other Bahamian islands next year once “lessons” from the trial roll-out are digested and put to use. He added that the network and technology will cost “a few million dollars at least”.

The digital Bahamian dollar is a key component in the Central Bank’s strategy to boost financial inclusion and access to essential banking services, especially for businesses and residents in remote Family Island communities who currently have to travel for miles to physically interact with providers.

It will also boost security for businesses and households by reducing reliance on cash, while helping to mitigate the impact of the commercial banking industry’s withdrawal from having a physical branch presence in many Family Islands.

Mr Joe yesterday said Bahamians would be able to access digital dollars through mobile apps and electronic wallet on their phone. For those without a phone, he explained they would still “be able to fully interact with” the digital Bahamian dollar via a card that would operate similar to a credit/debit card at participating businesses.

Referring to the digital Bahamian dollar’s project name, the NZIA executive added: “Project Sand Dollar is going to be an historic project, not just for the people of The Bahamas but also on a global landscape in terms of the scope and depth of the retail deployment. Our focus is people first, technology second.”

He added that NZIA planned to deploy a decentralised wireless payments system to underpin the digital Bahamian dollar, with no transaction fees involved so as to encourage use and accessibility.

“We’re not here to disrupt the financial industry,” Mr Joe said. “We’re here to work alongside banks and existing institutions here to augment financial services rather than disrupt. We’re looking at innovative ways to increase, rather than erode, bank deposit bases.

“We want to provide openings to ensure banks, micro, small and medium-sized enterprises, and Bahamian entrepreneurs can create new solutions around the CBDC to further economic growth. The key thing about this is this is not just a software project or technology project. The key to making this project a reality is how we make the CBDC available in every case to The Bahamas.”

Mr Joe added NZIA had developed similar network infrastructure in Africa and Asia, and had experience in working in island archipelagos similar to The Bahamas.

Meanwhile, Mr Rolle said the Central Bank in partnership with NZIA Ltd will “almost immediately” launch its outreach to the Exuma community, payments services providers and major sources of financial transactions such as the Government, National Insurance Board (NIB), utilities providers and communications companies.

“All those entities can expect almost immediate ramped up engagement from the Central Bank going forward,” the Governor added. While the Central Bank will have to take the lead in the digital Bahamian dollar’s initial development, he added that “our medium to long-term vision” is for the private sector payments providers to take this on and drive it.

“We anticipate they’ll be alongside us in the Exuma pilot so they get the necessary expertise from that to generalise it to the rest of The Bahamas,” Mr Rolle said.

“The focus in the coming months will be on ensuring we put in place a lot of regulatory structures in how the payments system operates generally in The Bahamas... For one thing we want to make the cost of concluding electronic payments lower. We want to reduce the cost of electronic payments for the average business and consumer.

“That’s very important. That’s the way to increase the willingness to accept electronic payments. We want to put electronic payments within reach of all Bahamians who want to use the technology. That speaks to financial inclusion,” he added.

“We’re looking at improving the regulatory framework - not just for this but financial services generally so once people go through the process of enrolling through a licensed financial services provider they’ll have an easier time establishing relationships with other institutions, and they deposit and recover funds from their bank account. That’s one element of access to banking.”

Mr Rolle added that the digital Bahamian dollar will also potentially improve access to credit, as well as reduce the security risk associated with businesses and individuals holding large amounts of cash.

Acknowledging that business and community education was vital, he said: “Part of the public message is to understand the security features and how to be secure in operating in a digital environment.”