Memorandum of Understanding
Barbados-based Startup Company, Bitt Inc., has signed a Memorandum of Understanding (MOU) with the Central Bank of Curaçao and Sint Maarten (CBCS) to probe into the scopes of introducing a digital guilder. The main objective of signing the MOU was to launch a central bank cryptocurrency to enable transactions between the union of Curaçao and Sint Maarten. According to the official announcement, the bank is planning to restrict the levels of cash circulation within the monetary union, allowing a “more Anti-Money Laundering (AML) and Know Your Customer (KYC) compliant” cash flow between the islands.
The signing of the MOU served as an official agreement of the proposals made during April 2018, when the CBCS conducted the second round of its Central Banking Conference. The MOU, which represents a crucial milestone for both the parties, highlights the great determination and effort of the institutes and their zeal towards exploring emerging technologies like blockchain. Besides all the enthusiasm around the appropriation of blockchain technology, the fact that there will be a Central Bank backed virtual currency has created a lot of noise among in the market.
Commenting on the ambitious venture, Leila Matroos-Lasten, acting President of the CBCS said: “The CBCS herewith recognizes the transformative potential of innovation and technology and is committed to exploring solutions regarding the efficiency of cross-jurisdictional transactions and digital payments whilst ensuring compliance and security assurances obtained by these state of the art (fintech) solutions. This would be beneficial to everyone.”
Bitt By Bitt
Rawdon Adams, the son of the prime minister of Barbados (1976-1985) was appointed the CEO of Bitt Inc. in 2017. As evident from the company strategies, the hiring added weight to the plans for expansion in the region. That year saw some significant developments that strengthened Bitt’s vision of developing a more economical alternative. Among the notable developments, the partnership with the central bank of Barbados was of utmost significance, as the tie-up catalyzed the advancement of the pilot blockchain projects.
When interviewed about the collaboration, Rawdon Adams, the CEO of Bitt Inc. reported: “The MOU clears the way for collaboration and information sharing regarding a feasibility study, designed to determine the viability and functionality of using a central bank-issued digital guilder within the financial ecosystems of each member, and across both members of the monetary union.” Speaking of the tie-up, Adams further added that the expenditure of minting fiat currencies and their dissemination might be expensive. Discernibly, digital currency can be deployed on mobile wallets, allowing members to expedite the transactions in the monetary union in a secure way.
Adams observed that a Central Bank cryptocurrency has a number of advantages for the adjacent member states that are spaced apart by oceans or long distances like Curaçao and Sint Maarten as fiat transactions across these islands and neighboring states are expensive and debilitating. Issuance of Central Bank based digital assets will reduce the challenges involved with traditional currency, developing a frictionless and seamless financial transaction system. Members of all the member states can equally benefit from such cross-border transactions, which take an abnormal amount of time to execute.
The initiative of building a central bank based digital currency witnessed tremendous response from the Dutch Caribbean banks, but the move was not entirely free from criticisms. As per the reports, the director of the Dutch Central Bank, Petra Hielkem, observed that factors like price volatility of digital assets are likely to be an impediment on the path of success. Regarding the consumer risk, she further added that since cryptocurrencies are not “real money”, central banks don’t have the power to ban or regulate them. Iran has committed to a similar project recently that aims to develop an exclusive state-owned cryptocurrency for its members.