The Eastern Caribbean Central Bank (ECCB) and the Barbados-based fintech company Bitt Inc have signed a contract to conduct a blockchain-issued Central Bank digital currency pilot within the Eastern Caribbean Currency Union.

The watershed contract was signed on 21 February at the Central Bank’s headquarters in Basseterre, St Kitts and Nevis. The pilot is the first of its kind and will involve a securely minted and issued digital version of the EC dollar.

According to a statement from Bitt, the digital dollar will be distributed and used by licensed financial and non-bank financial institutions within the currency union.

The digital currency will be used for financial transactions between consumers and merchants, including peer-to-peer transactions, all using smart devices.

“For example, an individual in St Kitts and Nevis will be able to send digital currency securely from his/her smartphone to a friend in Grenada in seconds — and at no cost to either party,” Bitt explained.

According to Damien King, economist and executive director of the Caribbean Policy Research Institute, “This move by the ECCB is of massive significance, even on a global level, but especially for Caribbean islands because it has the potential to eliminate nearly all the cost and delays of international transactions.”

The governor of the ECCB, Timothy N J Antoine, emphasised that in contrast to previous digital currency 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 digital currency deployment with a view to an eventual phased public roll-out.

“The pilot is part of the ECCB’s Strategic Plan 2017-2021 which aims to help reduce cash usage within the Eastern Carribbean Currency Union by 50 per cent, 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,” Antoine said.

The ECCB is now poised to embark on the digital currency pilot from March 2019. The pilot will be executed in two phases: development and testing, for about 12 months, followed by roll-out and implementation in pilot countries for about six months. As part of pilot implementation, the ECCB will ramp up its sensitisation and education initiatives to facilitate active public engagement throughout all member countries.

“I thank the ECCB for choosing Bitt. Our mission is the practical application of the newest 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 significant improvement to the lives of all its 630,000 citizens,” CEO of Bitt Inc Rawdon Adams said.