`
CDB hosts
launch of
Caribbean
Settlement
Network’s
Working
Group
The Caribbean Development
Bank (CDB) last June hosted
the launch of a Working Group
of regional stakeholders tasked
with determining the feasibility
of establishing the “Caribbean
Settlement Network” (CSN) -- a
proposed regional public good,
which intends to resolve the
decades-long challenge of cross-
border trade and remittance
settlement among Caribbean
nations.
Upon the realization of this not-
for-profit regional public entity,
Caribbean residents and businesses
would be able to conduct intra-
regional cross-border digital
financial transactions instantly
on their smartphones or tablets
using digital versions of their local
currencies at a fraction of the
current cost of wire transfers and
remittance channels.
Currently, almost every intra-
regional financial transaction, from
the individual to business and
governmental, involves the use of
various correspondent banks, since
these transactions are conducted
and settled in foreign currencies via
the international banking system.
This process incurs significant fees
and can take several days. The
de-risking phenomenon has only
exacerbated the existing challenges
associated with cross-border
settlement via the conventional
international financial settlement
system.
Between the late 1970s and
the early 1980s, the short-lived
CARICOM Multi-lateral Clearing
Facility (CMCF) eliminated most
of the correspondent banking
challenges that plagued intra-
regional trade settlement. That
agreement facilitated direct trade
settlement between the member
states and worked well until
difficulties arose and the system
was disbanded. While the CMCF
framework dissolved, the need for
secure, efficient, and cost-effective
intra-regional trade and remittance
settlement still exists. The CSN
is, therefore, a new-age solution
to a historical need to resolve
longstanding intra-regional trade
settlement challenges.
The purpose of the Working
Group is to drive consensus-based
decisions regarding the structure
and implementation of the CSN,
by bringing together major
stakeholders and subject matter
experts, including academics,
regulators, governments,
multilateral institutions,
regional institutions (CARICOM,
CARIFORUM, CSME, Capri, etc.),
the financial services sector, and
fintech entities, to deliberate
and agree on a roadmap for
establishing the CSN.
In stating the role of individual
Working Group members, Dr. Justin
Ram, Director of Economics at the
www.slyoumag.com | September-October 2019
CDB, outlined: “Members of the
Working Group will participate on a
voluntary basis by invitation (based
on consensus) and contribute
to the goal of creating the CSN.
The contribution of each member
of the Working Group will be
agreed, based on their individual/
organization’s resources, time
and expertise. All commitments
will remain transparent to all
members at all times to encourage
collaboration, avoid duplication
of effort, and to promote
accountability. It is just the start
and we expect more regulators and
interested parties to be invited to
become members and be a part of
this exciting initiative.”
The Working Group of the CSN,
which also includes global
blockchain and financial technology
experts from Bitt Inc., discussed
the Working Group’s proposed
legal structure, and that of the
CSN, as the immediate next steps
to establish the CSN as a regional
public good.
With reference to the FinTech
sandbox in Barbados and the
Eastern Caribbean Central Bank’s
(ECCB) central bank digital
currency (CBDC) pilot with Bitt Inc.,
the Working Group acknowledged
the region’s desire to be a global
leader in cross-border digital
payments, and aspires to establish
the CSN by 2020.
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