With the adoption of digital currencies, Caribbean countries are quickly emerging as global leaders in digital finance.

Last year The Bahamas spearheaded the digital movement and became a global leader in e-money when it launched one of the world’s first central bank digital currencies (CBDC) — the Sand Dollar —beating China’s digital yuan to the market by six months.

The Bahamas has sinced announced the integration of the Sand Dollar into ArawakX, a Bahamian crowdfunding platform and stock exchange.

The Eastern Caribbean Central Bank also rolled out its DCash digital currency to Dominica earlier this month, making the e-money accessible in the seven nations that are part of the Eastern Caribbean economic bloc.

Along with Dominica, DCash is now being used in Eastern Caribbean nations of Montserrat, Antigua and Barbuda, Grenada, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines.

The bank said it will eventually roll out DCash to Anguilla, the bloc’s associate member.

DCash, which first launched in March this year, aims to achieve the efficiency of payment systems and the financial inclusion of population groups with and without banking details.

According to American think tank Atlantic Council’s Central Bank Currency Tracker, only nine countries have fully launched their own digital currencies — The Bahamas, the seven nations of the Organisation of Eastern Caribbean States, and Nigeria, which is the sixth most unbanked country in the world.

There are various reasons why central banks in the Caribbean would adopt digital currencies ahead of larger central banks. The islands have low financial inclusion levels, high cash usage, high costs of current payment methods and banking services, inadequate banking services, and inefficient payment systems resulting in slow electronic transfers and settlement.

On the other hand, CBDCs offer consumers 24/7 accessibility and faster, simpler payments, and increase economic participation among all sectors of society.

As reported by the World Bank, almost a quarter of the world’s adult population does not use banks or banking institutions in any capacity.

To make it much easier for citizens to access financial services and regulated economic opportunities, governments in small and developing countries prioritise digital currencies that can be accessed virtually anywhere using smart devices.

In contrast to cryptocurrencies, which are valued for anonymity and independence from financial authorities, CBDC is the digital form of a country’s fiat currency.

This is not the first time technology has raced ahead in underdeveloped regions. In rural India, the number of mobile phone connections exceeds landlines. A 2011 census found that 68 per cent of households own only a mobile phone, while one per cent owns a land line only.

Notwithstanding, other countries are joining the race of the future of money. There are 14 countries, including Jamaica, China, and South Korea, which are in the pilot stage of their CBDCs, 16 countries are in the development stage, and 40 are still conducting research, the tracker indicated.

Interestingly, Australia, Malaysia, Singapore, and South Africa are moving forward with the world’s first cross-border central bank digital currency exchange programme, Project Dunbar, which is being led by the Bank for International Settlements (BIS).

Project Dunbar brings together the Reserve Bank of Australia, Central Bank of Malaysia, Monetary Authority of Singapore, and South African Reserve Bank with the BIS Innovation Hub to test the use of CBDCs for international settlements.

Meanwhile, the Bank of England has indicated that a CBDC will not be launched in the UK before 2025. In a statement, the central bank said it plans to launch a consultation with the UK Treasury in 2022, which will assess the case for issuing a CBDC. This will include whether further work to develop technology and operational models are needed. The results of the consultation will determine whether UK authorities move to a development phase which will span several years.

Of the countries with the four largest central banks (the US, the Euro Area, Japan, and the UK), the US is furthest behind.

According to American news outlet TIME, an upcoming US Federal Reserve paper on a potential US digital currency won’t take a position on whether the central bank of the United States will, or even should, create one.