Jamaica and Barbados will, in the next six months, become the first two territories to access a new pan-Caribbean digital payment settlement system called CaribDollar (Carib$).

Carib$, a stablecoin or kind of cryptocurrency, is being developed by partners Abed Ventures Inc out of Barbados and German entrepreneur Dr Jan Schröder.

Addressing a virtual conference hosted by the Caribbean Telecommunications Union (CTU), Schröder, chief system architect at CaribCoin Inc, said that while there were already CBDCs, the regional stablecoin that is currently being developed has the potential to transform trade and the wider Caribbean business landscape.

He indicated that a stablecoin similar to cryptocurrency can have its value pegged against legal tenders like the US dollar and other commodities such as gold or petroleum.

Carib$, he therefore said ,”will be backed by Caribbean assets and will enable the settlement of accounts between traders or vendors doing business in different Caribbean territories (cross-border) in the legal tender of each party’s country of origin without the use of intermediaries such as banks, using an online platform to transfer the electronic funds.”

The digital payment system will also provide a solution for the unbanked and will also allow small traders and micro, small and medium-sized enterprises (MSMEs) to make payments seamlessly and instantaneously and through safe and private channels.

Speaking at the recently held event, Trinidad and Tobago-based economist Marla Dukharan said that the region is in need of innovative solutions to meet the need of the poor and those operating in the informal economy.

“With no robust and efficient trade settlement system for such categories of business, digital currency provides a viable alternative. Digital currencies also provide additional options for the poor in the region who depend on remittances to survive, since the cost of transfer using traditional means varies between three to 25 per cent of the value of the funds being transferred,” she noted.

CTU Secretary General Rodney Taylor indicated that with an appropriate regulatory framework, digital currencies can potentially deepen the Caricom Single Market and Economy (CSME) thrust, enhancing financial inclusion in the region.

Sharing on the Organisation of Eastern Caribbean States’ experience with digital currency, Sharmyn Powell, chair of the fintech group of the Eastern Caribbean Central Bank, said that the roll-out of its DCash digital currency has been solving some recurring issues in the financial system including the high cost of payment methods and banking services; the inadequacy of banking services in addressing the needs of the unbanked customers and other inefficiencies in the financial management systems.

The Carib$ project was developed late last year and is expected to be rolled out to other Caribbean territories. With a pan-Caribbean dollar, traders will be able to buy pineapples as a grocer in Barbados from Jamaica, using the currency without having to do the usual back and forth and US dollar conversions.

“Just use this one digital money across the Caribbean. It will deliver seamless, faster and cheap payments, provide liquidity and enable fast-track towards CSME without a need to replace national currencies,” Schöder stated.

“We still have to set up the business plan, we are however in the phase of setting up a product and doing product-market fit at the moment,” he added.