Caribbean Islands are launching their digital currency

San JuanThe Eastern Caribbean created its own form of digital currency with the goal of streamlining transactions and serving people who don’t have bank accounts.

The Central Bank of the Eastern Caribbean said of her DCash It is the first blockchain-based currency of its kind to be launched by any of the world’s monetary unions, although some individual countries already have similar systems.

The digital currency became available in four island states starting Wednesday under a one-year pilot program: Saint Lucia, Grenada, Antigua and Barbuda, and Saint Kitts and Nevis

“It is a milestone in the history of monetary instruments,” said Brian Popelka, CEO of Bitt, at an online press conference.

DCash was founded by Barbados-based financial technology company Bitt in partnership with the central bank. Unlike cryptocurrencies, DCash is issued by an official central bank and has a fixed value indexed based on the current East Caribbean dollar used in much of the region.

The system allows users, even those who do not have a bank account but have a smartphone, download an application and make payments with a QR code. Those without a bank account can go to a previously authorized agent or non-bank financial institution to have their information verified to approve a “DCash” wallet. Later, the person would go to a grocery store or other retailer to deposit cash in their wallet, Bitt spokesman Chris Burnett explained to The Associated Press.

There is also a limit to the amount of money that can be sent through DCash. At the moment, there are no plans to integrate credit cards and no interest is applied to the digital currency.

While many in the Eastern Caribbean have welcomed the milestone, some experts are concerned that digital currencies issued by small countries could eventually be used for illegal activities, such as terrorist financing and money laundering, said Eswar Prasad, trade policy professor. Cornell University.

“That skepticism is diminishing as more central banks become involved and as central banks around the world face the inevitable decline in the use of cash,” he said.

Emphasizes that The Bahamas became the first country to launch its digital currency domestically last year, with the Marshall Islands considering having its own cryptocurrency.For smaller countries, “the stakes are higher,” in part because many people still don’t have a bank account, he added.

“For this reason, it seems to me that small countries are more aggressive in this regard, simply because they have to be,” said Prasad.

The authorities said so digital currency will be available in Anguilla, Dominica, Montserrat and Saint Vincent and the Grenadines by September at the latest, which are part of the eight island economies that make up the Central Bank of the Eastern Caribbean.

The project aims Use 50% less cash by 2025said Sharmyn Powell, chairman of the bank’s fintech task force.

“It’s safer, faster and cheaper,” Powell said.

Central bank governor Timothy NJ Antoine said he is considering the use of digital currency by farmers, fishermen, small business owners, single mothers and those without bank accounts.

“Payments are still too slow and expensive,” said Antoine of the current system. “We have listened to them and we have fulfilled them.”

According to Antoine, it is more difficult to steal digital money and is a safe way to make payments and avoid contact during the pandemic.

A The East Caribbean dollar currently equals 37 centsAll East Caribbean banknotes, of whatever denomination, bear the image of Queen Elizabeth II of England as head of the Commonwealth of Nations.

The project takes place more than two months after the European Central Bank, the Bank of Japan, the Bank of Canada, the Bank of England, the Riksbank of Sweden and the Swiss National Bank set up a group to promote the possibility of issuing coins. to study. .

The Swedish central bank has already commissioned a pilot program. China, for its part, launched a digital currency in four cities in April 2020 as part of a pilot program that has since expanded to more than 20 cities.

However, it remains to be seen whether the central bank’s digital currency is the future, said Lee Rainers, a professor of fintech law and policy at Duke University.

“I approach the issue with some skepticism, as this technology has been around for over 10 years, but it has not taken off as a common medium of exchange,” he said.