There is a call for a central bank issued virtual currency in Barbados and the region in light of existing and emerging challenges associated with physical currencies.
This idea was put forward on Friday by Roland Haggins, vice president of enterprise integration and sales with the technology firm Bitt Technologies, who pointed out that digital currencies could attract more investment.
He was addressing the first day of the inaugural Whitsun weekend law conference entitled Keep Up! Law and Innovation at the Hilton Barbados Resort.
“High networth individuals are now allocating a larger portion of their portfolios to cryptocurrencies like Bittcoin and Ethereum . . . it is a way to diversify their portfolio moving away perhaps from even gold and into something different, something mathematical that can really add value,” he said.
“So this is one of the things that Barbados has that we can use to attract foreign exchange into Barbados. It has already been done; there is a financial technology company here. We are talking about merging finance with technology to improve the lives of people and to promote financial inclusion. A lot of venture capitalists are interested in investing in companies like this and we have already attracted significant investment into Barbados in this area,” he said.
However, Haggins said it would require “the right regulatory environment to attract even more foreign exchange that is much needed in this country”.
He argued that the blockchain technology would also provide jobs, and cut out a lot of the challenges currently plaguing the financial services industry including money laundering and derisking.
He said the severing of correspondent banks was creating a problem for the Caribbean by hampering its ability to do international business.
“Cryptocurrencies are being used currently, and it is being tested in Singapore, to actually eliminate the need for correspondent bank for remittance purposes. So that is something that could be looked at but I am not suggesting that this is the approach that we take,” said Haggins.
“I think the approach that we can take in the Caribbean and in Barbados is a move toward a central bank issued digital currency because physical currency is presenting a lot of problems. When you have a digital currency especially by a central bank all of a sudden you are able to monitor things. Money laundering, you wouldn’t want to do that with digital currency because it is highly auditable,” he explained.
Further, pointing to the benefits of digital currency and challenges associated with hard cash, Haggins said virtual currencies provided for seamless transfers instead of high costs and fees associated with the Fiat currency.
“Hard cash is more difficult to trace and that is why I talk about central bank issuing their own digital currency because then you can eliminate a lot of these problems that we have,” he added.
The downside to digital currency, said Haggins, is its current volatile exchange rate and limited supply.