Governor Antoine
Addresses the ECCU
Media on Launch of
FinTech Pilot Project
abundantly clear: the ECCB does
not intend to eliminate the use of
cash. Cash has its convenience and
will continue to play an important
role in our economy for the
foreseeable future. That said, the
ECCB is committed to reducing our
region’s use of cash and cheques.
Why?
In the ECCU, about 80 per cent of
all payments are effected using
cash or cheques. When we survey
our current payments landscape,
we cannot help but conclude that
payments are still too slow and too
expensive. Many of us know only
too well the high costs associated
with certain banking services.
Although a full-scale analysis of the
social cost of physical cash in the
ECCU has not been carried out, it is
indisputable that the costs of cash
services, inclusive of transporting,
storing and securing, are extremely
high. Invariably, these high costs
(not fully recognised by many
businesses) are passed on to
consumers. Within the informal
sector, cash tends to be the
dominant payment channel. This
reality means that the actors in the
informal sector bear a significant
burden of the cost inefficiencies of
cash transactions.
Lest we become too critical of
our small businesses, we should
also acknowledge that they too
face real constraints. For example,
some are required to pay as much
as 3.5 per cent on every credit
card sale. This exorbitant charge
reduces and, in some instances,
removes the incentive for small
businesses to offer their customers
electronic options such as credit
and debit cards. It also reduces
the ability of these businesses to
offer their customers discounts.
These experiences are sometimes
referred to as “financial frictions”.
It is against this backdrop that the
ECCB seeks to help remove some
of the current “financial frictions”.
Indeed, it is practical issues such
as these that led the ECCB and
Bitt Inc. to reach an agreement
to develop and pilot the digital
EC currency, with a supporting
digital payments and transfers
infrastructure. Ultimately, we wish
to see our people spend less of
their money on payment services
and more on the goods and
services they wish to consume.
Our Pilot
The ECCB Central Bank Digital
Currency (CBDC) pilot involves a
securely minted and issued digital
version of the EC dollar (DXCD).
The digital EC dollar will be issued
by the ECCB and distributed by
licensed bank and non-bank
financial institutions in the ECCU.
For the avoidance of any doubt,
the digital currency will operate
alongside cash as currently obtains.
Indeed, the ECCB will soon launch
a new family of bank notes using
polymer.
The DXCD will be used for financial
transactions between consumers
and merchants, people-to-people
(P2P) transactions, all using smart
devices.
The objective of this pilot project
is to assess the potential efficiency
and welfare gains that could
be achieved: deeper financial
inclusion, economic growth,
resilience and competitiveness in
the ECCU - from the introduction of
a digital sovereign currency.
IBM Hyperledger Fabric was
selected as the blockchain platform
because of its strong security
architecture (private permissioned
blockchain with strong identity
48 SL-YOU | Business, People & Lifestyle
management) and open source,
which contributes to its security,
flexibility and scalability among
other desired attributes.
Hereunder are some of the key
features of the platform:
• Private Permissioned Blockchain
• Open source, hosted and
managed by Linux Foundation
• Enterprise Grade Distributed
Ledger
• Supports business transactions
• Confidentiality of data through
channel architecture
• Privacy in channels through
private data feature
• Better performance and
scalability through flexible
architecture
While one acknowledges the
benefits of Distributed Ledger
Technology (shared ledger that
allows records/blocks to be added
and securely maintained in a way
that prevents tampering), the ECCB
recognises that network security is
a non-negotiable for a central bank
digital currency construct.
In light of this essential
requirement, the private blockchain
of IBM Hyperledger Fabric affords
the ECCB the ability to control who
can access the network, submit
and read the ledger of verified
transactions, and who can verify
them. Hence, the decision to opt
for a private rather than a public
blockchain.
Stakeholder engagement,
consultations and education
have been and will continue
to be central to the design,
development and deployment
process. During 2018, over a
period of eight months, the ECCB
engaged diverse groups of ECCU
stakeholders (financial institutions,
government institutions, private
sector institutions, professional
associations, merchants,
consumers) as well as regional
www.slyoumag.com | July-August 2019