Central Bank to take ‘Sand Dollar’ nationwide by Q3

Central Bank to take ‘Sand Dollar’ nationwide by Q3
Photo Credit: Central Bank of The Bahamas.

NASSAU, BAHAMAS — The Central Bank is preparing to make the Sand Dollar available nation wide by the end of the third quarter of this year, Deputy Prime Minister and Minister of Finance K Peter Turnquest revealed yesterday.

Turnquest was addressing Parliament on the proposed legislative reforms to Central Bank Governance, Financial Sector Crisis Management and Modernization of the Domestic Payments System.

He noted that the Central Bank Bill introduces several new provisions designed to complement and support the reform proposals to the financial crisis management framework, including establishing the Central Bank as the sole Resolution Authority for failing banks.

“The Central Bank would also be empowered to establish bridging entities to manage, temporarily, the assets of troubled entities in the midst of resolution,” Turnquest said.

“There is also important emphasis on domestic payments system modernization.  The Central Bank Bill provides  a framework for both the issuance and regulation of a Bahamian central bank digital currency.  The Sand Dollar, as the instrument has been called in the pilot phase underway, will provide for a interoperable digital payments infrastructure.  It will permit all supervised domestic institutions to provide digital financial services on a nationally integrated platform.”

He continued: “In so doing, it would promote accelerated outcomes for inclusion and access to financial services; and would offer a platform for domestic Fintech innovations.  Our over-arching e-Government initiatives, are also advanced within this framework.

“With intensive work underway on the technology infrastructure, and attention to key matters of regulations now in sharp focus, the Central Bank is preparing to make the Sand Dollar available, on a national basis, by the end of the third quarter of this year.”

Turnquest noted that the CBB Bill further opens up participation in domestic payments and settlements to non-banks such as credit unions, money transmission businesses and payments services firms.

“These will all be permitted to maintain settlement accounts at the Central Bank, and be equipped to direct their own payments through the ACH and RTGS,” he said.

Turnquest further noted that the Bill also articulates the governance framework for the management of the Dormant Account Fund, mainly the inactive deposits placed under the Bank’s custody; how those funds are to be invested and provisions for return of dormant funds subsequently claimed or transfer to the Treasurer.

He said: ”The CBB Bill also seeks to consolidate the Bank’s administrative monetary penalties regime, empowering the Central Bank, by regulation, to designate certain contraventions of the CBB Bill or any Act administered by the Bank, as violations and to impose fixed penalties in respect of such violations.”

This provides for an efficient, more transparent and evenhanded approach across all supervisory processes, Turnquest noted.

With regard to the Banks and Trust Companies Regulation Bill 2020 contains most of the substantive provisions for the resolution of troubled financial institutions.

“One of these would be the requirement that banks develop acceptable advance plans around how their operations would be wound up, in the event of a failure or forced dissolution,” Turnquest said.

“This plan is to be reviewed annually and is the responsibility of the Bank’s senior management.”

He said: “For the expediency of financial stability and protection of depositors, resolution of failed financial institutions would follow an administrative process, with the Central Bank empowered to prepare a Resolution Plan and to appoint a statutory administrator to oversee the recovery or liquidation of the entity if it is determined by the CBOB that the entity has engaged in unsafe practices in such a manner that weakens the banks condition, threatens depositors interest or dissipate banks assets or contravenes the provisions of this Act or CBOB directive.”

The Bill also gives the Statutory Administrator the power to transfer assets, right and liabilities to an  Asset Management Vehicle and prescribes the conditions upon which shush transfers can occur and the responsibility of the bank to report to the Minister on such activities.

It provides for the appointment of liquidators in the winding up of a bank, which may not be done voluntarily without the permission of the Central Bank.

The Bill also makes provisions for the adjusted fees schedule for Bank & Trust Companies which was enacted last year in respect to the removal of preferential licensing regimes for financial institutions.