(Bloomberg) -- Bermuda is taking another step toward embracing cryptocurrencies. The North Atlantic chain of islands is testing a digital stimulus token, which can be used to buy food and other essentials.
The pilot program was started in July with 20 people and one local shop, and it is being gradually expanded. The stimulus token is a so-called stablecoin, which aims to keep its value from fluctuating much and is backed by bank deposits. The coin, created by the Stablehouse coin clearing firm, was designed to be used by businesses the government wants to help.
Bermuda is already accepting tax payments and fees in another stablecoin, USD Coin. The island has also met with Libra, the Facebook-led crypto project that's yet to launch, according to Premier E. David Burt.
The government wants to use an array of stablecoins that are completely backed by fiat and comply with its regulations. It's also looking at using so-called decentralized finance applications to provide easier access to loans for its residents.
“We believe we are the ideal test bed,” said Burt, who was an information-technology consultant and mobile-app developer before diving into politics.
Bermuda, a self-governing British overseas territory with a population of more than 71,000, is seeking ways to provide financial services to residents, some of whom don't have bank accounts, but carry smartphones.
“Bermuda is trying to position itself as a leader in the digital economy,” Burt said in a phone interview.
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