In September 2021, the Central Bank of Trinidad and Tobago (CBTT) released a document suggesting the adoption of Central Bank Digital Currencies (CBDCs) to simplify the process of converting currencies. The primary aim was to enhance trade within the region. This proposed approach involved establishing a Caribbean Plurilateral CBDC Swap Arrangement (C-PSA), which would connect various Caribbean central banks through bilateral agreements. This arrangement would make use of a two-tiered CBDC system.
Assuming that the participating nations had implemented a CBDC system with features geared towards retail transactions and intermediation, individuals such as small-scale traders and service providers who rely on cash transactions would gain the ability to utilize mobile wallets. Under this framework, commercial banks would assist in converting payments received in one currency into the respective national currencies, bypassing the need for the US dollar as an intermediary currency. This would reduce the demand for foreign exchange reserves and, more significantly, contribute to the goal of promoting greater economic integration within the Caribbean Community (CARICOM) Single Market and Economy (CSME).
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