TT Central Bank declares digital currency “not a priority”

Above: The T&T Financial Complex. Photo by Mark Lyndersay.

While the Central Bank welcomes technological developments that strengthen  efficiency and financial inclusion, the establishment of a Central Bank digital  currency is not a priority at this time.

In a statement on the Bank’s position on financial technology and virtual  currency, it expressed concern about the risks involved with these technologies,  however, it has committed to understanding the possibilities and application to  the domestic financial institutions and the operations of the Central Bank itself.

One offshoot of this technology has been the development of virtual currencies  or virtual money, which is a type of unregulated, digital money that is issued  and usually controlled by its developers and used and accepted among the members  of a specific virtual community.

It acknowledged the potential positives in the introduction of virtual  currencies; the possible reduction of transactions costs and a stronger  financial system in Trinidad and Tobago in an environment of increasing global  competition for financial services.

The Central Bank intends to engage Fintech companies/providers to understand the  possibilities and application in the domestic financial environment, including  in the area of regulation and supervision (Regtech).

The Bank will discuss with its licensed financial institutions how they are  adopting Fintech, and their plans to address risk and consumer protection issues  as part of its ongoing supervision activities.

The Bank will engage with those companies wishing to provide such new financial  services in order to understand the products, and to assure that the framework  for the conduct of such activities, including governance structure, risk  management, recourse measures, and financial soundness are well established  prior to public launch.

A testing environment for the new products will facilitate the evaluation.

The Central Bank noted that the financial landscape is evolving rapidly and some  new and upcoming financial products may not have been foreseen under traditional  legislation/regulation but affect a broad range of consumers and the wider  payments system particularly in the case of digital wallets.

It added that recent developments in financial technology (Fintech) offer  immense possibilities for improvement in the efficiency and security of  financial transactions as well as financial inclusion by providing easier,  cheaper and more accessible options to the public for engaging in such transactions.

The Bank, however, cautioned that: a) the investments may be volatile and risky;  b) the transactions may facilitate money laundering, terrorism funding and other  criminal activities; and c) investors/depositors will not have the backing of  deposit insurance or a financial supervisory agency in case of problems.