Eastern Caribbean Central Bank€¦ · Eastern Caribbean Central Bank 8/29/2019 Transforming The ECCU Together 3 Key Messages Adapting to this brave new world of proliferating virtual

Eastern Caribbean Central Bank

8/29/2019 Transforming The ECCU Together 1



PRESENTATION OUTLINE

PART ONE: IMPORTANT CONSIDERATIONS ABOUT THE FUTURE OF MONEY Overview of Digital Currencies: Central Bank Digital Currencies (CBDC)

Adoption: Key Risks and Opportunities

A Move Towards CBDC: Existing Payment System and DXCD – What’s Really Changing?

PART TWO: ECCU DOING BUSINESS LANDSCAPE (TOURISM SECTOR) Evaluation of Existing Payment Systems

Implications for Tourism Evolution and Key Stakeholders

CASE STUDY: ECCB Digital Currency Pilot

CASE STUDY: ECCB DIGITAL CURRENCY PILOT Strategic goals and opportunities

DXCD’s Transformative Potential for the ECCU

Explore the Possibilities: Doing Business and Accessing Financial Services



Key Messages

Adapting to this brave new world of proliferating virtual

currencies will require an open mind and the institutional

framework to adapt to the shifting landscape by incumbent

banks, payment service providers and regulators alike

Governments and regulators are keen on adopting a dynamic

approach to payment infrastructure which encourages

innovation and promotes a multichannel payment

environment



Key Messages

Financial system innovations and the Internet of Money is

heavily tilted towards improving customer experiences by

reducing pain points and serving unmet unidentified needs

as the borderless digital universe expands

Amidst the current wave of payment digitization, the potential

of ECCB’s blockchain-based digital currency can propel the

ECCU’s transformation and development



IMPORTANT CONSIDERATIONS ABOUT THE FUTURE OF MONEY

Overview of Digital Currencies The Growth of the Digital economy is

driven by the explosion of FinTech andincreased virtualization of Money …

Consumer relationships with cash is morevirtualized and abstract as the next phase ofthe FinTech revolution - the future of moneyitself – takes hold

The Internet of Money (IoM) offersundiscovered potential for unleashing a newperiod of expansive growth in transactions

The Future of Money, (EYGM 2017)



Cash, CBDC, Private Digital Currencies, e-Money

IMPORTANT CONSIDERATIONS ABOUT THE FUTURE OF MONEY



A Move Towards Digital

Currencies…

A world beyond physical cash



A Move Towards Digital Currencies…

The digital era and digital currencies pose challenges:

Unintended consequences of rapid physical cash phase-out

Interoperability

Consumer protection: data and privacy

Financial integrity risks

Cyber security risks


9

Comparative Overview

Features / Uses

CBDC:

DXCD

Physical

Cash

Bank

Deposits

Card

Payments

Wire

Transfers

Interest-bearing

Token based

Account based

Physical representation

Virtual representation

Used for money creation

Centralised

Dimensions of money

Counterfeiting

Anonymity

Internet dependent

Special cases

Feeless Transactions

Overview of ECCB

Digital Currency

(DXCD) and Existing

Payment System

Options

A Move Towards CBDC … What’s Really Changing?


10

Comparative Overview

Features / Uses

CBDC:

DXCD

Physical

Cash

Bank

Deposits

Card

Payments

Wire

Transfers

AML/CFT Requirements Apply

Special cases

Traceability

Backed by foreign currency

ECCB Liability

Commercial Bank Liability

Theft

Recoverability

Special cases

Parity / Convertibility

1:1 / XCD 2.7:1 USD

Cybersecurity risks

Overview of

ECCB Digital

Currency (DXCD)

and Existing

Payment System

Options

A Move Towards CBDC … What’s Really Changing? Cont’d



ECCU Doing Business Landscape:

Evaluation of Existing Payment Systems

Overall, the number of cashlesstransactions per capita in the ECCUremains significantly below high-incomecountries, and has fallen below theaverage of upper-middle income countries

Most used non-cash retailpayment instruments: Paymentcards , Cheques

Paper-based transactions rangebetween 80.% to 90.0 % of overallretail payments

Retail Payment Systems and Instruments: ECCU and the World

Trends in cashless transactions per capita, 2010-2015

Source: World Bank Fourth Global Payment System Survey



ECCU Doing Business Landscape : Caribbean Tourism Sector

ECCU Tourism has seenits global market sharedecline, partly reflectinglack of competitiveness



PROMISING OPPORTUNITIES FOR TOURISM EVOLUTION

Bolster Tourism Business

and

ECCU Competitiveness

Description Potential Impact

Leveraging Fintech,

innovative solutions and

strategies to reduce the use

of cash

• Improve ECCU global market share

• Reduce structural bottlenecks to pricing and

access

• Improve ease of doing business rankings

• Reduced transaction costs

• Reduced incidence of crime

• More efficient regional market

• Operational efficiencies

ECCU Doing Business Landscape : Caribbean Tourism Sector



PROMISING OPPORTUNITIES FOR TOURISM EVOLUTION

Tourism Data

and

Sector Development

Description Potential Impact

Point and Enterprise Solutions to modernise data

gathering, monitoring and analytics

Streamline and automate administrative and

operational procedures, digitizing work and data tools

• Promotions and Marketing

• Improved business and market intelligence

• Real-time data on tourism demand and

spending: Travel receipts, Visitor Expenditure,

Stay-Over Tourism Arrivals

• Enhanced CRM (NB. Customer Loyalty)

Business and Social

Networks

Technology –based

interactions with the

financial system and

communities

Payment/ finance/ commerce and social integration

Financial & Social Inclusion – MSMEs, sole proprietors,

niche market segments

(BigTech, Big Data, IoT, mobile technology, AI and

computing power)

• Reduced data fragmentation

• Transactional efficiencies

• Enhanced safety and security

• Sector consolidation (conglomerates)

• Decreased competition in market segments

ECCU Doing Business Landscape: Caribbean Tourism Sector … cont’d



ECCB DIGITAL EASTERN CARIBBEAN

CURRENCY PILOT

• What is the ECCB Doing and Why ?


Transforming The ECCU Together8/29/2019 16

Digital Eastern Caribbean Currency

• The EC Dollar in digital

• A faster, secure, accessible, real timepayment system in the EasternCaribbean Currency Union (ECCU).

DXCD

DXCD… a more attractive means of payment



DXCD is NOT a Cryptocurrency

DXCD:

Legal tender digital currency issued by the ECCB

Electronic Platform / Technology: Private Permissioned Blockchain Network (IBM-Hyperledger Fabric)

Identity of all parties is verifiable



Medium of Exchange:

P2P, B2B,M2M, P2B,B2P, P2M, M2P, B2M, M2B

Instantaneous settlement

Secure and Recoverable

Transact via Internet, Smart devices, Digital wallets

(Value-based and Registered-Based wallets)

Not a savings, deposit, lending or an investment instrument

Sovereign Currency: Legal Tender and Co-circulates with physical currency (DXCD $2.7:US$1.0)

DXCD – Key Features



ECCB FinTech Pilot Overview

KEY PILOT COMPONENTS

MINTING AND ISSUANCE

HIGH SECURITY DIGITAL CURRENCY (DXCD)

PAYMENTS

AND

TRANSFERS (ECCU)

FRAUD PREVENTION

KYC/AML/CFT UTILITIES

DATA PROTECTION

Pilot Plan (18 months):

Development, testing and verification (12 months)

Rollout and implementation (6 months)

Starting March 2020: Live deployment in a controlled environment under the strict control and supervision of ECCB



Description

of ECCB

DXCD

ECOSYSTEMThe identity of all participants in

the DXCD ecosystem is verifiable


Transforming The ECCU Together8/29/2019 21

Financial Inclusion

Resilience

&

Competitiveness

Economic

Growth

Digital Currency Pilot –Strategic Goals and Objective



Creating

value in retailbanking

Modernisingtransactionprocessing

Acceleratingregionalcommerce

Enablingunprecedentedapproaches toefficiently explorecollaborativesolutions

Promote easeof commercerevolutionizingbusinessprocessesthroughdigitization

Proactivelyprotectcustomer dataand deployconvenientcompliancesolutions

Create Modernise Enable Promote Protect

The pilot’s intended purpose involves identifying solutions to some of ECCU’s critical financial system

challenges by …

DXCD’s Transformative Potential for the ECCU



Benefits for the Conduct of Business:Tourism Stakeholders, MSMEs, Entrepreneurs

DXCD’s Transformative Potential for the ECCUExplore the Possibilities … Doing Business and Accessing Financial Services



WHAT COULD

THE FUTURE

HOLD?

2025 and

Beyond…POTENTIAL PAYMENT SYSTEM SHIFTS IN MULTIPLE CHANNELS

(Unscientific Illustration)



Closing Thought…

“If the rate of change outside isfaster than the rate of changeinside, the end is in sight”

- Jack Welch, former CEO, General Electric



Eastern Caribbean Central Bank€¦ · Eastern Caribbean Central Bank 8/29/2019 Transforming The ECCU Together 3 Key Messages Adapting to this brave new world of proliferating virtual

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