Caribbean Central Banks Launch Payment System to Reduce Reliance on US Banks

• Four Caribbean central banks are set to launch a pilot project to develop an alternative payment system aimed at reducing reliance on the US dollar for trade and remittances. Spearheaded by the Eastern Caribbean Central Bank (ECCB), the Caricom Payment and Settlement System (CAPSS) seeks to transform cross-border transactions and will eventually link to Africa’s Pan-African Payment and Settlement System (PAPSS), established in 2022. The pilot will initially include Barbados, The Bahamas, ECCB member states, and one additional country to be confirmed.
• Designed as a real-time, low-cost platform operating in local currencies, CAPSS mirrors PAPSS, a centralised system developed by Afreximbank and the African Union to enable secure, real-time cross-border payments in local currencies across Africa. The African platform currently connects central banks, commercial banks, and payment service providers in countries including Nigeria, Ghana, Kenya, Egypt, and Rwanda, among others.
• The Caricom adoption of the model is intended to facilitate regional trade and remittances in local currencies, bypassing costly and often unreliable correspondent banks in the United States. “We cannot continue to rely on correspondent banks, particularly those from the US,” said ECCB Governor Timothy Antoine. Through CAPSS, transactions — such as from Grenada to Guyana — could be settled in Eastern Caribbean and Guyanese dollars, with central banks and the African Export-Import Bank serving as settlement agents.
• “In day-to-day transactions, traders will be trading in local currencies. That, we believe, is a potential breakthrough,” Antoine noted. He also emphasises that “…while background settlements will still involve US dollars between central banks, the day-to-day transactions will use local currencies – a key innovation with broad potential.”

(Source: Caribbean National Weekly)