Currency Board In 1919, the British Government established the
Board of Commissioners of Currency to issue local Bahamian currency pegged to the
pound sterling. The Board helped promote the Bahamas' emergence as an international currency trading and banking center during the 1960s and 70s. By December 1967, there were 208 banks and trust companies in the Bahamas, up from only 37 in 1963. By 1974, there were 323. However, the legislative framework was inadequate to provide for the proper regulation and supervision of banking activities.
Monetary Authority In 1968, the
Bahamas Monetary Authority (BMA) was created in the board's place. The government also subsequently ended the Bahamian dollar's pegging to the pound and pegged it instead to the
US dollar. The Authority had an expanded role in the financial system of the Bahamas. First, the BMA operated under a centralized system, under which it would buy and sell foreign exchange. This allowed banks to place their foreign reserves under the control of the BMA, effectively eliminating their foreign exchange risk. Second, the BMA was authorized to purchase Bahamian government debt marking the beginning of a discretionary monetary policy. Finally, the BMA was authorized to serve as a lender of last resort to the commercial banks in the event of a financial emergency. The BMA was, however, short-lived and was replaced in 1974 by the
Central Bank of The Bahamas.
Central Bank The Central Bank was established on 1 June 1974 by
The Central Bank of The Bahamas Act. The Bahamas is a member of the
International Monetary Fund (IMF), allowing it to apply exchange control to capital account transactions, foreign equity investments, direct foreign investment, and other inward and outward flows of money.
Digital Currency In October 2020, the central bank released its digital currency called the
Sand dollar, the digital version of the Bahamian dollar. == Responsibilities ==