Bahamas: Currency & Financial System

The Bahamian dollar entered circulation in 1966, replacing the Bahamian pound at a rate of one dollar to seven shillings as the colony moved toward decimal currency. Coins and banknotes bearing the new denomination appeared that year, including unusual three-dollar notes and fifteen-cent coins designed to ease the transition. A fixed exchange rate against the United States dollar followed in 1973, and the Central Bank of The Bahamas opened on June 1, 1974, taking over the note-issuing authority previously held by the Bahamas Monetary Authority.

The Bahamian dollar has traded at parity with the U.S. dollar ever since, a one-to-one peg the Central Bank maintains through reserve requirements, discount-rate adjustments, and selective credit controls rather than currency-market intervention. As of 2026, the peg remains official policy, and Bahamian officials have described abandoning it as impractical given the economy's dependence on tourism and U.S. dollar-denominated trade. Both currencies circulate interchangeably in shops and hotels. In October 2020, the Bahamas became the first country in the world to issue a central bank digital currency, the Sand Dollar, offered as an electronic complement to physical banknotes rather than a replacement for them.

Financial services form the second pillar of the Bahamian economy after tourism, a role built on the offshore banking industry that expanded rapidly after the 1990 International Business Companies Act lowered the cost of incorporating companies in the country. By the late 1990s, hundreds of banks and trust companies held Bahamian licenses. International pressure over money-laundering standards led the government to tighten financial-sector rules in December 2000, establishing a Financial Intelligence Unit and new client-verification requirements, and many international businesses subsequently relocated elsewhere. The country was removed from the Financial Action Task Force's greylist in December 2020, and the sector continues to operate alongside the country's longstanding absence of income, corporate, and capital-gains taxes.