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.