Digital Cash Grows in Eastern Caribbean

Digital cash is growing in the Eastern Caribbean. Central bank digital currency (CBDC) is a form of digital token that is issued by a country’s central bank. This digital currency is usually based on the value of the nation’s fiat currency.  CBDCs boasts a wealth of perks to consumers and other players involved. Here are some advantages of CBDCs: Faster, cheaper, and more secure transactions.
  • Direct access to central bank funds.
  • Money is easy to track as all CBDC transactions are captured on a digital ledger.Counters the risk of a commercial bank collapse.

The Upsurge of Digital Cash

Attention to CBDC has surged in recent times, and the Eastern Caribbean has been at the helm of this trend. The currency union’s central bank became the first blockchain to launch a digital currency pilot, DXCD, in 2019. The letter ‘D,’ which stands for digital, is prefixed to the letter ‘XCD,’ which stands for the EC dollar’s international currency code.  The DCash is a retail CBCD minted, issued, and redeemed by the Eastern Caribbean Central Bank (ECCB) and distributed by regulated banks and non-bank financial institutions in the Eastern Caribbean Currency Union (ECCU). The island’s monetary authority sees DCash as a safer, quicker, and cheaper way to pay for services and goods and transfer funds to other digital cash users using a smart device. 

Implementation of CBDC in the Eastern Caribbean 

The DCash pilot was developed by a Barbados-based fintech company Bitt in collaboration with ECCB. The launch of the DCash pilot was implemented in two phases, under the authority and supervision of ECCB:
  • Phase 1 – the development and testing stage, which debuted in 2019
  • Phase 2 – the initial rollout and implementation of CBDCs in 2021
The DCash pilot was first rolled out to four of the ECCU octet member nations, including Grenada, Antigua and Barbuda, Saint Lucia, and Saint Kitts and Nevis. Part of the impetus for establishing the CBDC is a desire to reduce the use of conventional notes and coins by 50% by 2025.

Eastern Caribbean CBDC Implementation Results 

The experiment was a success, and the Eastern Caribbean DXCD mobile wallet application is now available to the general public. It enables users who do not have a bank account to register and use the digital form of the money via the app. It is, in some respects, completely innovative. The digital currency’s primary goal is to promote economic development and competitiveness by lowering domestic transaction inefficiencies and encouraging financial inclusion. “CBDCs are transforming how financial transactions are conducted around the world. This change brings significant benefits, especially to emerging economies. DCash is a game-changer for the people of the Eastern Caribbean,” said Bitt’s chief executive, Brian Popelka, defining the digital currency as a “milestone in the history of monetary instruments.” Users can obtain the tokens using a digital wallet application, which allows for payments or transfers using smart devices. The transactions are carried out via authenticated and permitted APIs( Application Programming Interface), where security and regulatory checks are carried out via cloud-based systems before getting recorded on the blockchain ledger. The framework is built on DLT( Decentralised Ledger Technology), and tokens are transmitted over a private, permissioned network. 

CBDC Compliance Requirements

While CBDCs might help make fiscal transfers more efficient, they are not sufficient on their own. A connected digital compliance and identification system is necessary to achieve meaningful progress. Ahrvo Comply is ideally equipped to facilitate the adoption of any CBDC initiative. The Compliance solution comes in handy in streamlining client life-cycle management for financial institutions and businesses. 

CBDCs’ objective of enhancing financial integrity includes developing good governance and implementing end-user protections. As a result, financial companies and regulators are expected to safeguard end-users by adopting laws for anti-money laundering (AML), know your client (KYC), and other anti-corruption and consumer due-diligence practices. However, identity verification, such as AML, and KYC procedures, can be tedious, and some financial companies may lack the capacity and technology to do them. Such companies can outsource their compliance and security to  Ahrvo Comply.  Ahrvo Comply uniquely blends security, data integrity, and compliance into one holistic solution, helping you effortlessly integrate all your compliance solutions. Editorial comment: Good, May 8, 2022. Ahrvo Comply pitch should be hyperlinked to the Ahrvo Comply website.

Share This :

Leave a Comment

Your email address will not be published.