Caribbean Central Banks Ditch CBDCs for Fast Payment Systems
As CBDCs struggle with low adoption, the Caribbean is pivoting to instant payment systems to boost trade and financial integration. The post Caribbean Central Banks Ditch CBDCs for Fast Payment Systems appeared first on Global Finance Magazine .
In October's Global Finance Magazine, Caribbean central banks are shifting away from central bank digital currencies (CBDCs) to embrace faster payment systems. The Bahamas initiated this trend with its SandDollar in 2020, followed by the Eastern Caribbean Central Bank's DCash in 2021. However, low adoption rates led to DCash's discontinuation.
Economists argue that these digital currencies failed to gain traction. Barbados and the Eastern Caribbean Central Bank (ECCB) are now focusing on instant payment systems to ensure a more resilient and customizable financial infrastructure, essential for regions prone to natural disasters and reliant on tourism and remittances.
A notable incident occurred in 2022 when DCash experienced a significant outage that halted new transactions for two months, which negatively impacted consumer confidence. Jamaica's Jam-Dex initially offered a $15.69 incentive to early adopters, attracting 310,443 users, or 11% of its population. Key lessons from the Caribbean's CBDC experiment emphasize the importance of seamless integration with the banking system.
Adopting payment systems from India's Unified Payment Interface (UPI) and participating in the African Continental Free Trade Area (AfCFTA) are steps the region is taking. This move could connect the Caribbean to a market of 54 countries, home to 1.3 to 1.4 billion consumers and a combined GDP of about $3.4 trillion. Through the Caribbean Community's CAPSS payment system, based on Africa's Pan-African Payment System platform, the region aims to enhance trade opportunities.
Economist Dalano DaSouza notes that by leveraging this system for instant cross-border transactions, Caribbean nations could sidestep correspondent banks, such as those in the U.S., England, or Europe. This could potentially transform trade dynamics and provide a competitive edge in digital and paperless trade systems, which have already reached 73% implementation in 2025.
The shift from CBDCs to instant payment systems in the Caribbean signals a broader move towards digitalization, with the goal of expanding business opportunities both regionally and globally.
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