The Eastern Caribbean Central Bank (ECCB) has launched the first retail central bank digital currency (CBDC) within a currency union.
The ECCB, the monetary authority for an octet of island economies including St Lucia and Grenada, describes blockchain-based ‘DCash’ as a digital version of its Eastern Caribbean dollar that offers a ‘safer, faster and cheaper’ way to pay for goods and services, and send funds to other DCash users, using a smart device.
A retail CBDC is one issued for the public, while a wholesale CBDC is for financial institutions that hold reserve deposits with a central bank. Another island nation, the Bahamas, was the first country to launch a CDBC, with its ‘Sand Dollar’ becoming the first fully deployed digital version of a fiat currency last October.
DCash is, for now, available in four of the Eastern Caribbean Currency Union (ECCU) member countries – Antigua and Barbuda, Grenada, Saint Christopher (St Kitts) and Nevis, and Saint Lucia. The ECCB is aiming to go live in the four other nations – Anguilla, Montserrat, the Commonwealth of Dominica, and St Vincent and the Grenadines – in the coming months, at the latest by September, incorporating lessons learned from the initial rollout.
More than two years in the making
DCash has been developed in conjunction with a Barbados-based fintech company, Bitt, which inked a contract to conduct a blockchain-issued CBDC pilot within the ECCU a couple of years ago.
The ECCB sees the digital currency’s introduction as helping to increase financial inclusion, competitiveness and resilience across the islands’ economies. Part of the motivation to launch the CBDC is also an aspiration to cut the use of traditional notes and coins by 50 per cent by 2025.
Citizens and merchants can sign up to use DCash through participating financial institutions or by downloading an app from the Google Play or Apple Store. Unbanked citizens will need to meet ID verification compliance requirements at participating non-bank financial institutions.
E-commerce functionality is expected by the end of April, while DCash is designed to be interoperable with other ‘present and future’ digital currencies.
In a statement released to mark DCash’s debut on 31 March, the ECCB described its rollout as the ‘climax of over two years of extensive research, consultations, planning, software development, operational training, merchant acquisition, customer service, and marketing achieved through collaboration with the ECCB, Bitt and multiple external stakeholders’.
Live demo of transactions at launch event
A public launch event/press conference was held on launch day (‘DCash Day’), featuring the ECCB’s governor Timothy Antoine and fintech working group chairperson Sharmyn Powell, who were both at the central bank’s headquarters in Basseterre, St Kitts and Nevis; as well as interactions by video-link, including participation from Bitt’s chief executive Brian Popelka; and Jonathan Johnson, president of Salt Lake City-headquartered Medici Ventures, Bitt’s parent company.
The event featured an engaging live demo of a string of DCash transactions between ECCB team members. Antoine started the ball rolling by sending EC$100 DCash (worth about £27/US$37) via his smart-phone from the ECCB’s HQ to the smart-phone of the ECCB’s country manager in Grenada; upon receipt of the funds she sent the EC$100 on to the St Lucia country manager, who then dispatched the funds to his Antiguan counterpart. In the final leg of the money-go-round, the EC$100 was sent back to the ECCB’s HQ, with Antoine holding his phone aloft to show the EC$100 had safely returned from its (roughly six-minute) four-stop Caribbean circuit.
“CBDCs are transforming the way that 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 Popelka, describing the digital currency as a “milestone in the history of monetary instruments”.
Antoine described the rollout of DCash as a “critical first step in the grand project of building out a digital economy” in the ECCU. Elsewhere in the Caribbean, Jamaica’s government recently set out the timetable for the introduction of a central bank digital currency (CBDC), saying a pilot currency will be tested in the Bank of Jamaica’s (BoJ) fintech regulatory sandbox from May to December, with the aim of launching a Jamaican CBDC in early 2022. An Ireland-headquartered company, eCurrency Mint, is the technology provider.
WATCH ‘DCash Day – Online Launch event’ (01:31:49): the demo DCash transactions are from about 00:39:35 to 00:45:30
Credit: ECCB Connects (via YouTube)
REGISTER NOW ‘Delivering Central Bank Digital Currencies (CBDCs): Exploring the Technology Challenge’ – upcoming Global Government Fintech webinar, supported by our knowledge partner Amazon Web Services, on 22 April 2021