Bahamas strikes first with Sand Dollar amid US-China CBDC faceoff

It became the first country to roll out a CBDC available to all residents, and while the Bahamas is a small nation - with only 393,000 people - it appears to be an event of some global financial significance.

James Barth, a finance professor at Auburn University, placed the event in the context of a series of CBDC milestones, beginning with the launch of Bitcoin in 2009 and including Facebook's Libra announcement in 2019, China's CBDC trials in April, and the European Central Bank's statement about the possible issuance of a digital euro in October.

The new CBDC "Enables the people of The Bahamas universal access to digital payments and extends the reach of financial services to all corners of the nation," Joe told Cointelegraph.

"A [Chinese] CBDC will interact really well with dematerialized digital trade documentation so if China allows DC/EP offshore it will be a total game changer. In time I think they will."

Barth, for his part, agreed that the U.S. didn't have to hurry to bring a CBDC to market, as the U.S is the world's largest economy, accounting for 20% of global gross domestic product, and the U.S. dollar remains the world's dominant currency.

He further opined: "First mover advantage is crucial in this case - especially when you are competing with China." Financially, the U.S. is still dominant, but with regard to CBDC technology, it trails - "And here China is going to lead for sure as they are ready with their CBDC and are the second biggest economy globally."

Sogani explained this from the point of view of a bank customer: "If you are already having a great experience with Bank A," which uses a Chinese CBDC, "Will you open an account or download an app with Bank B - which does business with a U.S. dollar CBDC?" If/when China launches its CBDC, it will attract large numbers of global customers very quickly.

"China, of course, has been engaged in trials but with no information provided about a nationwide adoption date. Nevertheless, it is likely to be the first major country to issue a CBDC, and if so, it is likely to trigger other major countries to follow suit."

If China takes it global, "It will take the U.S. years of work to respond with a CBDC of its own, the so-called digital dollar," said Buckley.

Because the U.S. dollar, the incumbent global currency reserve, has much to lose by coming to market with a flawed CBDC, it appears to be moving cautiously, content to let smaller players such as the Bahamas do its beta testing.