It’s not often we hear news from the Caribbean. But now we have something to share from this part of the world, and it’s right up our alley.
In order to speed up transactions and assist residents without bank accounts, the Eastern Caribbean financial authorities have developed their own digital asset.
This digital currency was developed by a fintech company in Barbados by the name of Bitt in partnership with the Eastern Caribbean Central Bank. This currency differs from regular cryptocurrencies as it is issued by a central bank and has a fixed value tied to the Eastern Caribbean Dollar.
According to the Eastern Caribbean Central Bank, their “DCash” digital currency is the first blockchain-based currency of its kind to be made available by any currency union in the world.
This digital currency was made available to the public on Wednesday, 7 April 2021, in four island nations of the Eastern Caribbean. Grenada, St. Lucia, Antigua and Barbuda, and St. Kitts and Nevis are now making use of this currency.
How does it work?
This system can be used by individuals who don’t own bank accounts but would rather make use of a smartphone app to make payments using a QR code. Users without bank accounts would need to visit an approved agent or financial institution to have their details verified. After this, they will be issued with a DCash wallet.
They can then proceed to the nearest supermarket or store and deposit cash in exchange for this digital currency which would then be deposited into their wallet. Certain limitations have been implemented in order to restrict the amount of money users can send via DCash.
We have seen the financial industry making huge steps toward integrating payment methods with blockchain technology in recent weeks. And it seems that some countries are starting to catch on to this financial evolution as the global market capitalization for cryptocurrency has recently exceeded $2 trillion.
Some experts believe that digital currencies issued by smaller countries could eventually be used for illegal activities including money laundering and terrorism.
“That skepticism is waning as more central banks get into the act, and as central banks around the world face the inevitability of the declining use of physical cash,” in a comment by Eswar Prasad, a trade policy professor at Cornell University.
He went on to mention that the Bahamas was the first country to nationally distribute a digital currency last year, and it may seem that the Marshall Islands are up next. He also said that there is more at stake for smaller countries as many of the residents do not make use of banking services.
What’s next in this revolutionary plan?
Plans are being made to make this digital currency available in four more islands that make part of the eight island economies under the Eastern Caribbean Central Bank by September this year. The remaining islands are St. Vincent and the Grenadines, Dominica, Anguilla, and Montserrat
This big step forward for these island economies aims to reduce the use of physical currency by 50% by 2025. So far, their goal seems to be in reach. We could imagine this would be a difficult task for big economies, especially those with a thoroughly integrated banking system.
But with smaller countries like these, where people already do not make much use of banking systems, this simplified option would surely do very well. Experts say this option is safer, faster, and much cheaper. Surely these appealing factors would have no issues when it comes to DCash’s widespread adoption in the Eastern Caribbean.
The Eastern Caribbean financial authorities have identified an issue and come up with this ingenious solution to simplify the use of local currency for their residents. This is exactly the kind of groundbreaking innovation we like to see. And the fact that it’s coming from smaller countries just goes to show that global leadership toward a transparent financial system could come from the most unexpected places.