Blockchain-based digital version of the Eastern Caribbean Dollar (DXCD)

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In the last couple of years countries around the globe have shown an increasing interest in a central bank digital currency (CBDC). In countries like China, Uruguay, Sweden or the Bahamas this has resulted in the development and testing phase of their own central bank digital currencies.

After the pilot was carried out at the end of 2019, in October 2020 the Bahamas launched the “Sand Dollar”, a blockchain-based digital version of the Bahamian dollar, making the Bahamas the first country in the world to release a central bank digital currency.

The Eastern Caribbean Central Bank (ECCB) though is close on their heels. In 2019 the ECCB and the Barbados-based fintech company, Bitt Inc. signed a contract to conduct a central bank digital currency pilot within the Eastern Caribbean Currency Union and create a blockchain-based digital version of the eastern Caribbean dollar.

Phase 1 of the pilot, the development and testing began in March 2019 and Phase 2, the rollout and implementation, is about to take place in the second half of 2020. Phase 2 of the pilot will take place in Antigua and Barbuda, Grenada, Saint Lucia and St. Kitts and Nevis.

In this article our experts from Relocate Antigua will tell you all you need to know about the Digital Eastern Caribbean Dollar (DXCD), the pilot project, the usage and the expected benefits of the DXCD.

What is a Central Bank Digital Currency?

Before we tell you more about the Digital Eastern Caribbean Dollar, let’s have a quick look at central bank digital currencies in general.

The concept was inspired by blockchain-based cryptocurrencies such as Bitcoin, yet CBDCs are different from cryptocurrencies. In contrast to cryptocurrencies a CBDC is issued by the monetary authority of a country and represents the fiat currency of that country or region in a digital from.

Therefore, the ECCB will be the sole authority to issue and redeem the digital version of the Eastern Caribbean dollar.

With the DXCD pilot the ECCB hopes to address current problems such as the relatively high cost of banking services, which are at the same time often inadequate in addressing customer’s needs.

Benefits of the Digital Eastern Caribbean Dollar

During the pilot and after the official rollout users are expected to profit from a long list of benefits such as:

DCash is the name of the digital EC dollar during the pilot. A DCash user will enjoy the following benefits through the pilot:

  • The DCash is more cost-effective and faster, allowing payment without fees, in real time
  • A safe platform for storage and transactions + privacy of all your transaction information
  • No bank account is required = a more inclusive method of payment. Which is especially beneficial, because according to a report from 2015, around 50% of the population of the island states in the Caribbean have no bank account and thus no access to certain services. The DCash could change that in the countries that are part of the East Caribbean Currency Union.
  • In contrast to some card payment products, there is no minimum spending amount

In addition to that the governor of the East Caribbean Central Bank Timothy Antoine wants to harden the financial system against crime in the region and sees the DXCD as possibility to combat crime and reduce incidences of crime in the region.

The pilot is also part of the ECCB’s strategic plan 2017-2021. Among other things the plan aims to implement strategies to reduce the use of cash and leveraging fintech, potential impacts of this could be improved ECCU global market shares and a more efficient regional market.

the Digital East Caribbean dollar addresses major needs in the region

Availability and purpose of use of the DXCD

During the pilot you can acquire DCash by cashing in physical notes or coins or you can convert funds from your bank account. To do this you first have to register with a participating service provider/financial institution.

DCash can be send instantly either to businesses within the Eastern Caribbean Currency Union or to family and friends. Payment system: Participating merchants can generate a QR code which the customer can scan and pay his bills that way.

The future of CBDC and the digital East Caribbean dollar

After the completion of the pilot, it has yet to be announced, when and if the digital version of the EC dollar is going to go live.

While CBDC clearly offers numerous benefits, whether or not those CBDC will be successful in the long run will depend on different factors such as

  • Acceptance infrastructure
  • Number of cash-in and cash out points
  • Consumer education
  • Simple usage
  • Does the CBDC address major unaddressed needs in the country or region? If not, the adaption period might take much longer.
the Digital East Caribbean dollar addresses major needs in the region

Conclusion – the Digital East Caribbean dollar addresses major needs in the region

ECCU is at the forefront of launching one of the first CBDCs. This underlines the increasing interest and usage of cryptocurrency and Blockchain technology throughout the Caribbean in the recent years.

Apart from transactions in real-time without fees, we have already talked about a number of other benefits for the economy as well as for the citizens of the participating countries. For example, no bank account is required for the DXCD. This way, even people without a bank account can have access to services they weren’t able to use before. You are interested to learn more about this field? In our article “Cryptocurrency and Bitcoin in the Caribbean” we have put together all the information you need.

As our name indicates we at Relocate Antigua are experts in all things Antiguan. Get in touch with us to learn more about Antigua and Barbuda Bitcoin and your investment options on the islands. We are happy to advise you. Are you planning to relocate to Antigua and Barbuda? We try to make the transfer as easy as possible for your with our  business relocation services.

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