On Feb. 21, 2019, history was made at the Easter Caribbean Central Bank headquarters in Basseterre, St. Kitts and Nevis, when a watershed contract was signed between the ECCB and Barbados-based fintech company Bitt Inc. to conduct a blockchain-issued Central Bank Digital Currency (CBDC) pilot project within the Eastern Caribbean Currency Union.

The ECCB CBDC pilot is the first of its kind and will involve a securely minted and issued digital version of the (Eastern Caribbean) EC dollar, known as the DXCD. The digital EC dollar will be issued by the ECCB, the Monetary Authority for the eight member jurisdictions1 in the Eastern Caribbean, and distributed and used by licensed financial institutions and non-bank financial institutions in the ECCU.

The DXCD will be used for financial transactions between consumers and merchants, including peer-to-peer transactions, all using smart devices. For example, an individual in Anguilla will be able to send DXCD securely from his/her smartphone to a friend in Grenada in seconds – and at no cost to either party.

For the avoidance of any doubt, the digital currency will operate alongside cash. Indeed, the ECCB will soon launch a new family of bank notes using polymer. The objective of this pilot project as stated by the ECCB is to assess the potential efficiency and welfare gains that could be achieved from the introduction of a digital sovereign currency in terms of deeper financial inclusion, economic growth, resilience and competitiveness in the ECCU.

Announcing the project, ECCB Governor Timothy N. J. Antoine emphasised that in contrast to previous CBDC research and experiments, the ECCB is going a step further. “This is not an academic exercise. Not only will the digital EC Dollar be the world’s first digital legal tender currency to be issued by a central bank on blockchain, but this pilot is also a live CBDC deployment with a view to an eventual phased public rollout,” he said. “The pilot is part of the ECCB’s Strategic Plan 2017-2021 which aims to help reduce cash usage within the ECCU by 50%, promote greater financial sector stability, and expedite the growth and development of our member countries. It would be a game-changer for the way we do business.”

The governor detailed the history and reasoning behind the project. “Some of you may be wondering, what precisely, is the motivation of the Eastern Caribbean Central Bank in making this bold move? Simply put, it is shared prosperity for the citizens and residents of the Eastern Caribbean Currency Union.”

“For our region to improve our development prospects and performance, we must expedite our digital transition. To this end, regulators and innovators must work together. This pilot exemplifies such collaboration,” he added.

Bitt first approached the ECCB about two years ago with the idea of a digital EC dollar. As the ECCB continued thinking about transformation of the ECCU, the possibility of a digital fiat currency for the region was an interesting proposition.

At that time, the ECCB was finalising its Strategic Plan and made a decision to test and learn more about this idea through a pilot project. Five months after the launch of its Strategic Plan, the ECCB signed an MoU with Bitt in March 2018 to collaborate on this idea.

The decision of the ECCB to partner with Bitt was based on several considerations, Governor Antoine noted in a press briefing, including, “Our shared values in respect of innovation for development; our vision for a digitally integrated region; Bitt’s capacity: technical and financial; and Bitt’s Caribbean identity: presence and people.” The governor argued, “The transformation of the ECCU necessitates that we make a shift and a leap. We must move from our comfort zone to a challenge zone. But we must not stop there. From there, we must move into a creative zone. In this zone, we are obliged to challenge old assumptions, examine our cultural hang-ups and stretch our minds to embrace new possibilities.”

A cursory analysis of the ECCU confirms that while the exchange rate remains firmly entrenched with a strong backing ratio averaging around 98%, there remains a significant gap between the region’s growth target and actual performance. Last year, the region grew by 2.7%. This year, the ECCB projects growth of 3.1% and next year about 3.5%. While the direction is positive, the current growth trajectory falls well below the ECCB’s target of 5%. Furthermore, unemployment especially among youth is unacceptably high. In some countries, the rate of youth unemployment doubles the national rate of unemployment.

“Without a doubt, we need to elevate the CCU’s growth trajectory. Such elevation, external factors aside, requires a combination of smart reforms and investments in the ECCU,” Governor Antoine said.

To allay any fears that citizens and residents of the ECCU may have, especially those of an older generation, the governor noted that the aim is not to eliminate cash. It is convenient and will continue to play an important role in the economy for the foreseeable future.

However, the ECCB is committed to reduce the region’s use of cash and cheques, he said. Currently, 80% of all payments in the ECCU 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,” the governor said. “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.”

These high costs are not fully recognised by many businesses and passed on to consumers. And 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,” Antoine said.

In cautioning against criticism of small businesses, the governor noted, that they too face real constraints. Some are required to pay as much as 3.5%, which 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. The ECCB aims to help remove some of these “financial frictions” and the digital EC currency pilot project, with a supporting digital payments and transfers infrastructure, is part of that effort.

IBM Hyperledger Fabric was selected as the blockchain platform because of its security architecture (private permissioned blockchain with strong identity management) and it is open source, which contributes to its security, flexibility and scalability among.

“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,” Antoine said. “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.”

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 and international peer central banks, to identify the issues critical to the development of the customer value proposition and the resulting business requirements for the digital EC pilot.

The pilot will be deployed in three member countries based on the interest in participating by licensed financial institutions.

As part of pilot implementation, the ECCB will ramp up its sensitisation and education initiatives to facilitate active public engagement throughout all member countries in 2019.
These exercises will continue to focus on:

  1.  The appropriate treatment of the DXCD by the ECCB to safeguard the confidence in and the international value of the Eastern Caribbean currency.
  2.  The statutory business model as enshrined in Article 4 of the ECCB Agreement Act 1983 which is to: regulate the availability of money and credit; promote and maintain monetary stability; promote credit and exchange conditions and a sound financial structure conducive to the balanced growth and development of the economies of the territories of the participating governments; and actively promote through means consistent with its other objectives the economic development of the territories of the Participating Governments.
  3.  The quantity of DXCD units in circulation will be ultimately controlled by the ECCB, as is currently the case for our physical notes and coins.
  4.  DXCD issuance will be centralised with only the ECCB having the authority to issue and redeem DXCD. This restriction would ensure resilience in system operation and security.
  5.  DXCD units will be the liability of the ECCB as is currently the case with our physical notes and coins.
  6.  DXCD will be issued to licensed bank and non-bank financial institutions on a private permissioned blockchain platform.
  7.  KYC & AML/CFT Compliance.
  8.  DXCD storage and transactions will be conducted via DXCD accounts and wallets which form part of the design architecture.
  9.  Merchants/customers digital wallets will be a part of the digital payment network on the blockchain to facilitate transactions in DXCD.
  10.  The technical design of the DXCD system will prevent any transaction between DXCD wallets from increasing or reducing the overall supply of DXCD units in circulation, thereby eliminating credit and liquidity risks. The DXCD account cannot go into overdraft.

The pilot will be executed in two phases: development and testing, for about 12 months, followed by rollout and implementation in pilot countries for about six months. Throughout the 18-month period of the pilot, there will be education initiatives to facilitate active public engagement throughout all member countries as referenced above.

The pilot will be deployed in three member countries based on the interest in participating in the pilot expressed by licensed financial institutions domiciled in the countries, as well as other criteria, including: institutional capacity, geographic representation (Windwards and Leewards) and supporting technology infrastructure.

It will be conducted under the supervision of the ECCB and within a controlled environment (sandbox-type arrangement) and will have the appropriate safeguards to ensure the stability of the financial and monetary systems, including: Boundary; measures to ensure protection of participants (volunteer); risk management controls; and monitoring and evaluation mechanisms.

The ECCB is receiving technical support from Pinaka Consulting Ltd., the Blockchain technical adviser, with project execution.

Governor Antoine invited non-bank financial institutions, which provide wallet services, telecommunication service providers and other technology companies to join the effort.

Rawdon Adams, CEO of Bitt Inc., said his company’s mission is the practical application of cutting-edge technology to solve persistent financial problems. “It is about a successful currency union building on its impressive record of financial stability, development and integration to deliver a quantum improvement to the lives of all its 630,000 citizens.

Enhancing economic growth and the quality of life of ordinary people is the aim,” he said. The use of a digital currency will reduce the cost of doing business for the ECCB, he added.

This is indeed a bold and interesting development in the region, and it will be interesting to see how it develops over the next few years as the ECCB thrives to improve the lives and economic fortunes of the ECCU.


1 The ECCB was established in October 1983 and is the Monetary Authority for the eight member jurisdictions of the ECCU: Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St. Lucia and St. Vincent and the Grenadines.

Previous articleHas corporate management grown more brazen in abusing creditors?
Next articleA brief history of Argentina’s economy
Carlyle K Rogers

Carlyle K Rogers MBA, LLM is a barrister-at-law in Anguilla who practices in the areas of corporate and financial services law. He is also admitted in the BVI and New Zealand, owns and manages the Stafford Group of Companies.  He studied law in London at Queen Mary and Westfield College, University of London, where he obtained an LLB (Hons) degree in 2001 and with the University of London (International Programme) from which he obtained an LLM degree in Corporate and Commercial Law in 2005. He completed the Legal Education Certificate (LEC) at the Hugh Wooding Law School in Trinidad in March 2013 and was admitted as a barrister of the Eastern Caribbean Supreme Court in Anguilla and BVI in 2013. 

Carlyle K Rogers MBA, LLM
Stafford Group of Companies
201 The Rogers Office Building
Edwin Wallace Rey Drive
George Hill, Anguilla

T: 1 264 498 5858 + 1 264 498 5858 ; + 1 954 607 7239/7217
C: 1 264 476 5858 + 1 264 476 5858
F: + 1 264 497 5504
E: [email protected] 


Stafford Corporate Services

Stafford Group of Companies
201 The Rogers Office Building
Edwin Wallace Rey Drive
George Hill

T: 1 264 498 5858
T: + 1 264 498 5858
T: + 1 954 607 7239/7217
C: 1 264 476 5858
C: + 1 264 476 5858
F: + 1 264 497 5504 
E: [email protected]