What is the BSD (Bahamian Dollar)
Bahamian dollar (BSD) is the official currency of the Commonwealth of the Bahamas, and the Turks and Caicos Islands also use the BSD. The Bahamian dollar is made up of 100 cents and often appears through the symbol B$ to distinguish it from other currencies denominated in dollars. BSD pegs to the U.S. dollar at parity and businesses in the Bahamas accept either money.
The Central Bank of The Bahamas manages the BSD in banknote denominations of 1, 3, 5, 10, 20, 50, and 100 dollars. Coins circulate in denominations of 1, 5, 15, 10, and 25 cents and 1, 2, and 5 dollars.
BREAKING DOWN BSD (Bahamian Dollar)
Bahamian Dollar (BSD), the official currency of the Bahamas since 1966, replaced the British pound sterling (GBP) at a rate of 7 shillings to 1 Bahamian dollar. The island was a British colony between 1719 and 1973, so like other British colonies, the pound was the standard currency.
Following the end of World War Two, the British government found it didn't have the moral, economic, or military power to maintain its colonial empire, and many of its holdings began agitating for independence. The Bahamas were late to gain independence from the British Empire, not separating entirely from the U.K. until 1973. The Bahamas became a self-governing nation within the British Commonwealth in 1964, leading to the issuance of the Bahamian dollar in 1966.
Modern Economy and the Bahamian Dollar
The Commonwealth of the Bahamas is a group of 700 islands of varying size in the Atlantic Ocean, just north of Cuba. Due to their location along the rich trade routes of the 18th century, the area saw frequent use by pirates. During the leak of the Panama Papers, some of the wealth of the Commonwealth country came to light. These leaked documents detailed the financial information of a network of more than 214,000 tax havens involving people and entities from 200 different nations.
In the 1980s, the Bahamas became a route for the Colombian cocaine trade. During the first two years of that decade, island officials report they confiscated more than $800 million in cocaine, arresting thousands of locals and foreigners on drug charges.
Today, the Bahamian economy relies mainly on tourism from the United States, with that sector accounting for over 60% of the gross domestic product (GDP) for the country, and half of all the jobs on the island chain. Disney Cruise Line leases an island from the Bahamas which they call Castaway Cay. The financial services industry follows tourism in providing income as the government offers incentives to encourage foreign business banking.
Like many countries around the world, public debt in the Bahamas has grown since the financial crisis, reaching 75% of GDP in 2016. Due to its near total reliance on the service sector, the Bahamas is the only country in the Western Hemisphere that is not a member of the World Trade Organization.
According to the 2017 World Bank data, the Commonwealth of the Bahamas experiences 1.4% annual GDP growth with an inflation deflator of 1.3-percent.