Clearing house by mid year

Governor of the Central Bank of Barbados Cleviston Haynes is hoping that the long-awaited upgrade and expansion of the Automated Clearing House (ACH), a real time settlement system, will take place by the middle of this year.

He told a news conference on Wednesday that the first phase of the system was complete and only two of the island’s five commercial banks have signed on so far and are able to do real-time transactions. However, Haynes said he was hoping that the other banks along with the larger credit unions would sign on soon.

“The ACH upgrade is still a work in progress. Some of our banks have completed the integration, but I think some of them are also finding it difficult to get that integration completed,” he said, pointing out that he would be meeting with commercial banks to see how best to accelerate that process.

“Two is not sufficient because those two may not be your bank, and therefore we need to be able to get the other banks and the credit unions [into the ACH]. The big credit unions are also working to be brought into the ACH. Previously they were not, so they are all working to be able to do that,” said Haynes.

“My hope is that within the first half of this year we will be able to get everybody onto the real time ACH such that we will then be able to move from there to being able to get some cheaper financial transactions than we have at present,” he said.

In December last year, Minister in the Ministry of Finance Ryan Straughn, as he debated the Fair Credit Reporting Bill, 2021 in Parliament, gave the assurance that the ACH could be in place sometime early this year.

Haynes said not having all the banks on the system yet was an impediment to lowering the cost of some financial services.

“What we want to see as it relates to financial services, we want to be able to generate a framework that leads to low-cost financial services. We believe the ACH is one of the building blocks to enable our financial institutions to be able to offer cheaper financial services than we currently have,” said Haynes.

The ACH, which handles both cheques and direct payments, allows customers to carry out banking transactions in real time, which means that transfers will be instantaneous even if carried out outside regular business hours.

It also allows for financial institutions to use a digital representation of a cheque to be able to clear it so this transfer can also take place faster than the current seven or more business days.

The ACH forms part of a wider upgrade of the local payments system.

During Wednesday’s news conference when Haynes delivered his economic review for 2021, he also indicated that he was still of the view that digital currencies will be used in Barbados “in the future”, but noted that careful consideration was being given to how it would be adapted.

“It is something we are focused on. We are looking at it to see how we can have our own programme to determine how we go forward in relation to digital currencies,” said Haynes. (MM)