Three Caribbean cen­tral banks have an­nounced plans to in­tro­duce or ex­pand ex­per­i­men­tal re­tail cen­tral bank dig­i­tal cur­ren­cy (CB­DC) pro­grammes in the com­ing months.

Bank of Ja­maica (BOJ) Gov­er­nor Richard Byles re­cent­ly said plans are ad­vanced to de­vel­op and im­ple­ment the use of a cen­tral bank dig­i­tal cur­ren­cy (CB­DC) lo­cal­ly.

He said that over the last cou­ple months, the bank un­der­took the req­ui­site pre­lim­i­nary work re­lat­ing to as­sess­ments and pro­to­cols for ap­proval of the pro­posed dig­i­tal cur­ren­cy through the Gov­ern­ment’s process.

“So we are, hope­ful­ly, go­ing to Cab­i­net for ap­proval very short­ly and will [there­after] start a pi­lot in the sec­ond or third quar­ter of this year,” Byles ex­plained, adding that Ja­maica hopes to pub­licly launch its dig­i­tal cur­ren­cy in ear­ly 2022.

The East­ern Caribbean Cen­tral Bank had al­so an­nounced on Feb­ru­ary 12 the first trans­ac­tion in its planned re­tail CB­DC, called DCash, .

The first DCash pur­chase took place at a su­per­mar­ket on Grena­da.

The EC­CB be­gan a pi­lot pro­gramme for the CB­DC in March 2019. It plans to make DCash avail­able to the pub­lic at the end of March 2021. The cen­tral bank will un­der­take the “pub­lic roll-out” in four of the eight ter­ri­to­ries un­der its ju­ris­dic­tion: An­tigua and Bar­bu­da, Grena­da, St Kitts and Nevis, and St Lu­cia. Tim­o­thy An­toine, the EC­CB’s gov­er­nor, said the DCash project aimed to en­hance “fi­nan­cial in­clu­sion, com­pet­i­tive­ness and re­silience” for peo­ple in the East­ern Caribbean Cur­ren­cy Union.

The Cen­tral Bank of the Ba­hamas be­came the first cen­tral bank to in­tro­duce a re­tail CB­DC, called the “sand dol­lar,” last Oc­to­ber.

US-based fi­nan­cial ser­vices firm Mas­ter­card and one of its lo­cal part­ners in the Ba­hamas are prepar­ing a CB­DC-de­nom­i­nat­ed pre­paid deb­it card for re­tail use.

So where does this leave T&T and how far be­hind is this coun­try in im­ple­ment­ing dig­i­tal cur­ren­cy?

The Sun­day Busi­ness Guardian reached out the Cen­tral Bank of T&T which said in Sep­tem­ber 2020, the bank in­clud­ed the “Ex­am­i­na­tion of a Cen­tral Bank Dig­i­tal Cur­ren­cy (CB­DC) and its im­pli­ca­tions for en­hanc­ing pay­ment sys­tem ef­fi­cien­cy” as a Strate­gic Project in its 2016/2021 Strate­gic Plan to give it im­me­di­ate fo­cus.

Giv­en the po­ten­tial ben­e­fits of CB­D­Cs, sim­i­lar to many oth­er ju­ris­dic­tions, the bank said it has been con­duct­ing re­search to as­sess the fea­si­bil­i­ty of de­vel­op­ing and im­ple­ment­ing a CB­DC in the do­mes­tic set­ting and for cross-bor­der use.

The bank added that over the next few months, it ill be so­lic­it­ing the views of key stake­hold­ers and the wider pub­lic on the use of a CB­DC which will in­form the de­vel­op­ment of a pol­i­cy.

“There is cur­rent­ly no set time­line for the Bank to im­ple­ment a CB­DC as this will de­pend on the out­come of the re­search on a CB­DC that will meet our ob­jec­tives, and any fur­ther fea­si­bil­i­ty stud­ies that may be war­rant­ed If there is an agree­ment on a CB­DC, spe­cif­ic mile­stones will be es­tab­lished for im­ple­men­ta­tion,” the bank ex­plained.

On whether cit­i­zens are ready to be­come dig­i­tal­ly in­clined the bank said based on cer­tain in­di­ca­tors of tech­nol­o­gy adop­tion in T&T ( eg in­ter­net sub­scrip­tions), pen­e­tra­tion rates ap­pear high sug­gest­ing that cit­i­zens may be dig­i­tal­ly in­clined.

How­ev­er, in the con­text of the fi­nan­cial sec­tor, it not­ed that the bank will have a bet­ter sense of this lat­er this year as the pub­lic will be asked to share their views as part of a wider Na­tion­al Fi­nan­cial Lit­er­a­cy Sur­vey ex­pect­ed to be con­duct­ed un­der the Na­tion­al Fi­nan­cial Lit­er­a­cy Pro­gramme.

Lack of vi­sion

Caribbean econ­o­mist Dr Justin Ram said T&T re­mains still “way, way be­hind” the rest of the Caribbean re­gard­ing the im­ple­men­ta­tion of dig­i­tal cur­ren­cy.

“And it’s a re­al shame in my mind. I think it is just a lack of vi­sion,” Ram said.

He not­ed that oth­er coun­tries which have im­ple­ment­ed dig­i­tal cur­ren­cy have ex­pe­ri­enced many ben­e­fits, not on­ly in the re­duc­tion in trans­ac­tion costs of hav­ing to print bills all the time but al­so, an or­di­nary per­son can ac­cess dig­i­tal cur­ren­cy on his or her cell phone.

“Bar­ba­dos is in the process of do­ing what the Ja­maicans are do­ing,”Ram said.

He ad­vised that for dig­i­tal cur­ren­cy to be smooth­ly im­ple­ment­ed, T&T must first­ly look at its pay­ment leg­is­la­tion and amend those ac­cord­ing­ly to give a struc­ture to any sort of Cen­tral Bank dig­i­tal cur­ren­cy.

“In T&T I don’t think those dis­cus­sions are hap­pen­ing. If you think about it a cen­tral bank dig­i­tal cur­ren­cy means that you no longer have any use for notes be­cause there is no need for cash pay­ments,” Ram said.

He added that with cash there’s the risk of con­tin­ued cor­rup­tion and crime.

“If Trinidad was se­ri­ous about deal­ing with it crime prob­lem it will think about mov­ing very quick­ly to­wards dig­i­tal cur­ren­cy be­cause then you are able to trace sus­pi­cious trans­ac­tions eas­i­ly and there­fore crim­i­nal ac­tiv­i­ty could re­duce quite a bit,” Ram added.

The Sun­day Busi­ness Guardian al­so reached out to re­gion­al econ­o­mist Mar­la Dukha­ran who said as far as she was aware, the Cen­tral Bank has done its re­search and has de­cid­ed that a CB­DC (cen­tral bank dig­i­tal cur­ren­cy) is not some­thing it is pur­su­ing at this point in time.

“You would re­call that the CBTT just re-did the TTD notes to con­vert to poly­mer, as well as the de-mon­eti­sa­tion ex­er­cise con­duct­ed over a year ago. This sug­gests that phys­i­cal notes and the man­age­ment there­of, is their cur­rent pri­or­i­ty,” Dukha­ran added.

Cash re­mains king in T&T

Tra­cy Hack­shaw of the Fin­Tech As­so­ci­a­tion echoed sim­i­lar sen­ti­ments as Ram said there would seem to be a great deal of hes­i­ta­tion by the T&T reg­u­la­to­ry en­ti­ties to un­rav­el the red tape and bu­reau­cra­cy that typ­i­cal­ly hin­der the abil­i­ty of new Fin­Tech en­ti­ties to emerge, boot­strap them­selves and com­pete in the mar­ket with the es­tab­lished Fi­nan­cial In­sti­tu­tions.

As a mat­ter of pri­or­i­ty, this coun­try’s reg­u­la­to­ry en­vi­ron­ment should be ag­gres­sive­ly en­cour­ag­ing the de­vel­op­ment of the pri­vate sec­tor to work col­lab­o­ra­tive­ly with the CBTT to pro­to­type and pi­lot a CB­DC, test its fea­si­bil­i­ty and de­ter­mine how this can ac­cel­er­ate T&T’s par­tic­i­pa­tion in the glob­al dig­i­tal econ­o­my, Hack­shaw, an ICT and dig­i­tal econ­o­my strate­gist added.

He not­ed that while the mea­sures tak­en thus far (e-Mon­ey Is­suer Or­der, the Reg­u­la­to­ry Sand­box and the Joint In­no­va­tion Hub) are def­i­nite­ly valu­able steps for­ward, the CBTT should im­me­di­ate­ly seek to move even more proac­tive­ly to re­move any ob­sta­cles that would pre­vent the ad­vance­ment of the growth of Fin­Tech/Dig­i­tal Fi­nan­cial Ser­vices in T&T.

“As with the larg­er dig­i­tal ser­vices sec­tor in T&T, there re­mains a painful­ly risk-averse ap­proach to pro­vid­ing the nec­es­sary re­sources and sup­port for star­tups in the Fin­Tech/Dig­i­tal Fi­nan­cial Ser­vices sec­tor.

“While we have seen a cou­ple of these star­tups emerge in re­cent years, al­most against the run of play, there is not as yet (as is the case in sev­er­al coun­tries) a struc­tured and sus­tain­able ap­proach to ven­ture cap­i­tal and dig­i­tal sec­tor in­vest­ment in T&T,” Hack­shaw said.

And he ad­vised that if not quick­ly rec­ti­fied will most like­ly cre­ate the equiv­a­lent of a chill­ing ef­fect on the growth of dig­i­tal ser­vices in T&T, po­ten­tial­ly re­vers­ing many of the re­cent pan­dem­ic-catal­ysed sec­toral gains.

A vi­brant and healthy dig­i­tal ser­vices sec­tor, Hack­shaw said, will al­so con­tribute to un­lock­ing in­creased in­ter­na­tion­al in­vest­ment and for­eign ex­change in­flows, in­clud­ing, crit­i­cal­ly from the di­as­po­ra, and it is vi­tal­ly im­por­tant that the state rec­og­nize that a sig­nif­i­cant lev­el of con­sid­er­a­tion needs to be di­vert­ed here to en­sure that we are not viewed as be­ing asleep at the wheel while our high­ly mo­ti­vat­ed re­gion­al col­leagues at­tract all of the avail­able in­ter­na­tion­al in­vest­ment at­ten­tion.

Hack­shaw said the on­go­ing work of rel­a­tive­ly new spe­cial­ized or­gan­i­sa­tions such as the Fin­Tech As­so­ci­a­tion of T&T and the T&T IFC are al­so crit­i­cal to this coun­try rapid­ly ac­cel­er­at­ing its at­tempts to grow the dig­i­tal fi­nan­cial ser­vices sec­tor and to cre­ate the en­abling en­vi­ron­ment which will al­low the nec­es­sary sup­port­ing in­fra­struc­ture, in­cen­tives and in­sti­tu­tion­al frame­work.

“A high­ly col­lab­o­ra­tive mod­el must be forged be­tween the state and the pri­vate sec­tor; with each oth­er be­ing seen as be­ing equal stake­hold­ers in the path to­wards suc­cess,” Hack­shaw ad­vised.

He al­so sug­gest­ed that proac­tive and mean­ing­ful en­gage­ment with con­sumers and the gen­er­al pub­lic on the ben­e­fits of mov­ing from cash to dig­i­tal must be placed as an ab­solute pri­or­i­ty for any of this to be ef­fec­tive and have the re­quired im­pact.

In T&T, he not­ed cash re­mains king, and de­spite some slight move­ment of the nee­dle as a re­sult of the pan­dem­ic, sig­nif­i­cant­ly more work needs to be done.

“The true val­ue of a dig­i­tal cur­ren­cy es­sen­tial­ly lies in the trust of its po­ten­tial users ... with­out that trust, and with­out the be­lief that a shift to­wards dig­i­tal will bring a greater lev­el of con­ve­nience, re­duced costs, in­creased ac­count­abil­i­ty and a high­er qual­i­ty of ser­vice de­liv­ery, then it not dif­fi­cult to en­vis­age that de­mand will be ex­tin­guished and we will be right back to square one, los­ing mo­men­tum and falling even fur­ther be­hind in our jour­ney to ef­fec­tive­ly com­pete and suc­ceed in the glob­al dig­i­tal econ­o­my,” Hack­shaw added.