The Caribbean islands are launching their digital currency

San Juan. Eastern Caribbean has created its own form of digital currency in order to simplify transactions and serve people who do not have bank accounts.

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

The digital currency became available on Wednesday in four island countries, according to a one-year pilot program: Saint Lucia, Grenada, Antigua and Barbuda and Saint Kitts and Nevis.

“It’s a milestone in the history of monetary instruments,” Bitt CEO Brian Popelka told an online news conference.

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

The system allows users, even those who do not have a bank account, but have a smartphone, to download an application and make payments using a QR code. Those who do not have a bank account can go to a previously authorized agent or a non-bank financial institution to have their information verified to approve a “DCash” wallet. The person would later go to a supermarket or other store to deposit cash in his wallet, Bitt spokesman Chris Burnett told The Associated Press.

There is also a limit to the amount of money that can be sent through DCash. There are currently no credit card integration plans, and interest does not apply to digital currency.

While many in the eastern Caribbean have welcomed the important move, some experts worry that digital currency issued by small countries could end up being used in illicit activities, such as terrorist financing and money laundering, said Eswar Prasad, a political professor. at Cornell University.

“This skepticism diminishes as more central banks become involved and as central banks around the world face the inevitable reduction in the use of cash,” he said.

Emphasized that The Bahamas became the first country to launch its digital currency domestically last year, with the Marshall Islands considering its own currency.. For smaller countries, “the stakes are higher,” in part because many people do not yet 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,” Prasad said.

Authorities said that no later than September, digital currency will be available in Anguilla, Dominica, Montserrat and Saint Vincent and the Grenadines, which are part of the eight island economies that make up the Central Bank of the Eastern Caribbean.

The purpose of the project reduce cash consumption by 50% by 2025said Sharmyn Powell, chair of the bank’s fintech working group.

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

Central Bank Governor Timothy NJ Antoine said he was considering the use of digital currency by farmers, fishermen, small business owners, single mothers and people without bank accounts.

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

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

A The East Caribbean dollar is currently equal to 37 US cents. All East Banknotes of any name 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 Swedish Riksbank and the Swiss National Bank set up a group to study the possibility of issuing coins. .

The Swedish central bank has already commissioned a pilot program. For its part, China 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 because this technology has been around for more than 10 years, but it has not taken off as a general means of exchange,” he said.