By: Precious Mills
BASSETERRE, St. Kitts (Friday 15th March 2019)-“At the outset, I want to make it pellucidly clear that the ECCB does not intend to eliminate the use of cash.”
So said Governor of the Eastern Caribbean Central Bank (ECCB) Timothy Antoine while speaking at the launch of an $8 million investment pilot project for the issuance of digital currency in partnership with financial company Bitt during a press conference held on Tuesday 12th March at the bank’s headquarters in Bird Rock, Basseterre.
“Cash has its convenience and will continue to play a very important role in our economy and that’s for the foreseeable future. That said, the ECCB is committed to reduce the region’s use of cash and cheque.”
Bitt, according to its company website (www.bitt.com), is a financial technology company that utilizes blockchain and distributed ledger technology to facilitate secure peer-to-peer transactions with seamless mobile money across a suite of Bitt’s Software and Mobile Applications.
In explaining the bank’s reasoning regarding such planned reduction of use of cash and cheque, Antoine informed that in the ECCU (Eastern Caribbean Currency Unit) about 80 percent of all payments are effected using cash for cheques.
“When we survey our payment landscape, we cannot help but conclude that payments are still too slow and too expensive. Many of us know only too well the high costs associated with certain banking services.”
Although a close analysis of the social costs of physical cash in the ECCU has not yet been carried out, Antoine commented that “it is indisputable that the cost of cash services including transporting, storing, insuring (and) securing are extremely high. [Invariably], these high costs are passed on to the consumer. A lot people may not recognize but that is what happens, and it is also our
[observation]
that many businesses do not recognize the true and full costs of cash services.”
“This reality, however means, and given the fact that the informal sector is so important in our region, means that informal sector bears a disproportionate burden in respect of the cost of cash,” he added.
In sharing the bank’s motivation in making this “bold move” of the digital currency project, the top ECCB official, in one aspect, pointed out that: “For our region to improve our development prospects and performance, we must expedite our digital transition. To that end, regulators and innovators must work together and this pilot exemplifies this collaboration. Bitt first approached the ECCB about two years ago with the idea of a digital EC dollar. As we continue thinking about the transformation of the ECCU we became intrigued by the possibility of a digital fiat currency for our region. At that time, we were finalising our strategic plan and we made a decision to test and learn more about this idea through a pilot.”
As understood, five months after the launch of the bank’s strategic plan, a Memorandum Of Understanding (MOU) was signed with BITT in March of last year to collaborate on this idea and so the journey to the pilot began.
According to Antoine “The decision of the ECCU to partner with BITT was premised on several considerations including our shared values in respect of innovation for development, our vision for digitally integrated region, Bitt’s capacity-technical and financial and BITT’s Caribbean identity-both in terms of its presence as well as its people.”
The pilot project, he outlined, will be executed in two phases with development and testing for about 12 months followed by a roll-out and implementation for six months.
“Throughout the 18 month period of the pilot, there will be education initiative to facilitate active public engagement throughout all member countries,” Anotine noted.
Additionally, he said the project will be deployed in about three countries based on interest expressed by participating institutions, institutional capacity as well as some type of geographic representation.
An institution from one of the islands in the Leeward and Windward region as well as indigenous bank and an international bank and a non-banking institution will be looked at; all of which will be required to have the supporting infrastructure.
Chief Executive Officer of Bitt Rawdon Adams remarked that “One of the reasons why we’re so happy to do with this collaboration with the ECCB…we recognise the kindred spirit, and financial technology is a tool to help us remove some structural impediments we see in this region.”
He continued: “Our company is from Barbados and I think that some of the issues that the Governor has identified are common to us as well and these are things around inclusion, limits on growth to a lesser extent in Barbados but disaster preparedness and resilience, how can we overcome these sorts of problems? So it turns up in our view and we built a company on this technology we think it represents a huge chance for us to build a significant company and also solve everyday problems for citizens in the Caribbean. Well, the best way to do it is to partner with a key institution such as the Eastern Caribbean Central Bank…”