The Caribbean region is shifting its focus from central bank digital currencies (CBDCs) to instant payment systems as a means to enhance trade and financial integration. This move comes after low adoption rates of CBDCs, such as the Bahamas' SandDollar and the Eastern Caribbean Central Bank's (ECCB) DCash, which have prompted a reevaluation of digital payment strategies.
The Bahamas was among the first to experiment with CBDCs, launching the SandDollar in 2020. Following this, the ECCB introduced DCash in 2021. However, due to poor uptake and technical issues, including a two-month outage in 2022, DCash was discontinued. Economist Dalano DaSouza noted that these digital currencies never gained significant traction, leading to a pivot towards fast payment systems.
Barbados has already implemented a fast payment system known as BiMPay, launched on June 12. The ECCB is also exploring similar systems, aiming to provide a more resilient and flexible financial infrastructure. This shift is particularly important for the Caribbean, a region vulnerable to natural disasters and heavily dependent on tourism and remittances.
Jamaica's experience with its CBDC, Jam-Dex, further highlights the challenges faced. Despite offering a J$2,500 bonus ($15.69) to the first 100,000 users, the currency only reached about 0.09% of the total currency in circulation. Currently, 310,443 users are registered, representing roughly 11% of Jamaica's population. DaSouza emphasized the importance of integrating digital payment systems with existing banking infrastructure to ensure their success.
Regional Integration and Global Opportunities
The Caribbean's transition to instant payment systems is part of a broader effort to integrate with global markets. Platforms like WiPay and Lynk, along with Trinidad and Tobago's adoption of India's Unified Payments Interface (UPI), demonstrate a commitment to expanding trade opportunities. This includes potential integration into the African Continental Free Trade Area (AfCFTA), leveraging Africa's Pan African Payment System platform.
A pilot scheme is underway to connect Caribbean and African payment systems, involving Barbados, the ECCB, and Trinidad and Tobago's central banks. The African Export-Import Bank (Afreximbank) has been at the forefront of moves to bring the two regions together, which could open access to a market of 54 countries with 1.3 to 1.4 billion consumers and a combined GDP of approximately $3.4 trillion.
DaSouza pointed out that instant payments could bypass traditional correspondent banks in the U. S., England, or Europe, removing significant barriers to African integration. This shift is expected to enhance digital trade and paperless systems. As the Caribbean continues to pilot instant payment systems, there is optimism that this approach will lead to increased business opportunities, both regionally and globally. While CBDCs initiated the digital transformation of the Caribbean financial system, the focus now is on instant payments to open new markets and streamline existing ones.
