  The fast-growing, market-driven demand for cryptocurrencies worries central
banks, as their monetary policy could be completely undermined. Central bank
digital currencies (CBDCs) could offer a solution, yet our understanding of
their design and consequences is in its infancy. This non-technical paper
examines how The Bahamas has designed the Sand Dollar, the first real-world
instance of a retail CBDC. It contrasts the Sand Dollar with definition-based
specifications. I then develop a scenario analysis to illustrate commercial
bank risks. In this process, the central bank becomes a deposit monopolist,
leading to high funding risks, disintermediation risks, and solvency risks for
the com-mercial banking sector. I argue that restrictions and caps will be the
new specifications of a regulatory framework for CBDCs if disintermediation in
the banking sector is to be prevented. I identify the anonymity of CBDCs as a
comparative disadvantage that will affect their adoption. These findings
provide insight into governance problems facing central banks, and coherently
lead to the design of the Sand Dollar. I conclude by suggesting that combating
cryptocurrencies is a task that cannot be solved by a CBDC.
