By the end of the year, Barbados and Jamaica will become the first Caribbean territories to access a new pan-Caribbean digital payment settlement system, called CaribDollar (Carib$).
Carib$, a stablecoin, is the creation of partners Abed Ventures Inc, out of Barbados, and German entrepreneur, Dr Jan Schröder.
The digital currency’s introduction to the region was announced at the Caribbean Telecommunications Union’s (CTU) webinar, Demystifying Cryptocurrency and Digital Cash in the Caribbean held virtually, on June 3, 2022.
CaribCoin Inc’s Chief System Architect, Dr Jan Schröder explained that a stablecoin is a kind of cryptocurrency – the value of which is pegged against legal tender like the US dollar and/or other commodities such as gold or petroleum.
In introducing Carib$, he said it will be backed by Caribbean assets. Dr Schröder further explained that the cryptocurrency will “enable the settlement of accounts between traders or vendors doing business in different Caribbean territories (cross-border) in the legal tender of each party’s country of origin without the use intermediaries such as banks, using an online platform to transfer the electronic funds.”
Carib$ will also provide a solution for the many unbanked small traders and Small Medium and Micro Enterprises (SMEs) to make payments both seamlessly and instantaneously as well as safely and privately.
Mr. Rodney Taylor, CTU Secretary-General, noted: “Within an appropriate regulatory framework, digital currencies can potentially deepen the Caribbean Community’s Single Market and Economy (CSME) thrust.”
Economist, Marla Dukharan, said: “The region is in need of innovative solutions to meet the need of the poor and those operating in the informal economy, such as hucksters and other small traders.”
She said that in the absence of an efficient trade settlement system for SMEs, digital currency provides a viable alternative.
Dukharan continued: “Digital currencies also provide additional options for the poor in the region who depend on remittances to survive, since the cost of transfer using traditional means varies between three to twenty-five percent of the value of the funds being transferred.”
Sharmyn Powell, Chair, FinTech Group, Eastern Caribbean Central Bank shared the Organisation of Eastern Caribbean States’ experience with digital currency.
She stated: “The Central Bank sought to address some recurring issues in its financial system with its new digital currency, DCash, namely, the high cost of current payment methods and banking services; the inadequacy of banking services in addressing the needs of the unbanked customers; and the inefficiencies in the financial management systems of unbanked small traders, which could slow the pace of commerce.”
Vashti Maharaj, Adviser, Digital Trade Policy at Trade Oceans and Natural Resources at the Commonwealth Secretariat offered another perspective.
Maharaj said: “Cultural barriers, such as resistance to change and limitations with financial literacy or digital skills, will require emphasis to be placed on public awareness, education and capacity building in order to promote the ready adoption of the new technologies.”