The Central Bank of the Bahamas is setting up some rules that will require commercial banks to distribute the country’s underperforming central bank digital currency (CBDC), aiming to boost its lackluster adoption rate, Reuters reported on July 1.

John Rolle, the central bank’s governor, told Reuters that the initial approach of encouraging voluntary adoption hasn’t been as successful as hoped. As a result, the central bank is shifting to a more mandatory approach, making it necessary for commercial banks to offer the “Sand Dollar” CBDC to their customers.

Rolle said that the central bank has begun “signal[ing]” that shift to stakeholders, saying that the new regulations should be in place within two years.

“We foresee a process where all of the commercial banks will eventually be in that space and they will be required to provide their clients with access to the central bank digital currency,” Rolle reportedly said.

While mandating the Sand Dollar’s availability will require significant IT upgrades for Bahamian banks, the central bank views this as a crucial step towards not only increasing the CBDC’s adoption but also fostering a broader shift towards mobile payments in the country.

Rolle believes that mandating the integration of the Sand Dollar into commercial banking systems will increase its usage. However, he acknowledges that the ultimate goal is to have businesses, particularly in the retail and hospitality sectors, accept the CBDC as a form of payment.

The Bahamas was the first economy in the world to launch a CBDC, officially introducing its Sand Dollar in October 2020. The central bank-issued digital currency, however, currently accounts for less than 1% of the total currency in circulation in the country. Additionally, central bank data reveals a significant drop in wallet top-ups, falling to $12 million in the eight months leading up to August 2023, compared to $49.8 million during the same period in 2022.

While the Sand Dollar faced significant challenges in its first few years, the central bank’s recent data reveals a notable shift in its adoption rate. It revealed a significant increase in the adoption of the Sand Dollar by the end of 2023, with the total amount in circulation reaching $1.7 million—a 60.8% jump since the start of the year.

Other countries that have launched CBDCs, such as Nigeria and Jamaica, have also seen limited adoption. Meanwhile, India, whose CBDC is still in the pilot phase, is reportedly exploring ways to boost adoption, particularly in areas with limited internet access.