Above: Illustration by denisismagilov/DepositPhotos

BitDepth#1298 for April 22, 2021

On March 31, the Eastern Caribbean Central Bank (ECCB) launched a Central Bank Digital Currency (CBDC) system for the eight member states of the EC.

It is the second retail payment system active in the world, and the first implemented project within a monetary union.
It is in use in four islands in the EC, Antigua and Barbuda, Grenada, St Lucia, St, Kitts and Nevis. The other four states will be brought into the DCash fold by September 2021, with a special priority on St Vincent and the Grenadines.

Using D-Cash, payments and domestic remittances can be made across borders in the territories under a yearlong pilot project that’s meant to define systems and procedures for the final implementation of the CBDC.
The Bahamas SandDollar project is also active, and a Jamaican CBDC is under active development. Haiti has announced plans for a CBDC project.

The motivation for the development of DCash was spelled out by Sybil Welsh, Senior Project Specialist at the ECCB during a webinar in June 2020 when she explained: “You can’t really integrate the region if you have to move cash by plane or boat.”

The key goals of DCash are to reduce cash transactions by 50% by 2025, increase financial inclusion and provide a faster, cheaper and safer digital currency alternative to the people of the Eastern Caribbean.

The problem isn’t only one for the financially linked but separate states of the Eastern Caribbean. The Caribbean archipelago, linked by geography, ancestry and cultures has largely resisted the kind of economic and strategic unification that’s proven valuable to other related nations, notably the European Union.

According to Shiva Bissessar of Pinaka Consulting, “The identification of the problems associated with cross border transactions is well defined and understood, but the willingness to establish a cohesive practical response which can be implemented is where we begin to unravel.”

“The emergence of CBDCs in the Caribbean region does assist in stimulating the conversation of what is the next possibility here.”

Pinaka Consulting was selected via public tender as the Blockchain Technical Advisor to the Eastern Caribbean Central Bank (ECCB) in early 2019.
Bissessar has worked on the project since its inception two years ago.

“Along with my technical lead, St Lucian born, MIT graduate, Mr. Javed Samuel, we augment the capacity of the ECCB to manage the overall programme of activities and the technical deliverables, ensuring defined requirements are met.”

Bissessar was particularly inspired by ECCB Governor Timothy Antoine’s statement at the launch of DCash, “We cannot outsource our development.”

Beyond the immediate value of turning cash transactions into controlled digital currency, Antoine noted that, “…innovation goes at the amortisation schedule of legacy systems,” and that, “the pace of our development is at the mercy of decision makers within and outside our environment.”

By taking the reins of their technical backend, the ECCB is using digital technologies to more fully control the development and relevance its financial systems.

For Bissessar, it has been a journey through regional capacity.

Barbados’ Bitt is the ECCB’s digital currency management systems partner for the DCash project.
At the virtual launch of DCash, Bitt’s CEO, Brian Popelka said, “The lessons learned during the design, delivery and rollout of DCash have confirmed that Bitt has the right team to support a CBDC from development deployment.”
“We have developed DCash to be interoperable with present and future digital currencies in mind.”

The next step will be to push greater interoperability of CBDC regimes between islands.
Bissessar notes current testing of cooperative arrangements between existing CBDCs underway in four countries, Hong Kong, Thailand, UAE and the People’s Bank of China.

“Some research into the concept of a Caribbean Settlement Network has taken place via the IADB,” he said.
“However more effort may be required at the policy, legal and regulatory level.”

“A concerted effort by regional Central Banks at the forefront of CBDCs can assist this agenda, as they may be most able to test solutions here.”

“Many eyes are on the Bahamas and ECCB to gauge performance of CBDCs in a live retail payment environment. The world is watching us in the Caribbean and assessing their next move.”