Caribbean: Major Bank Partners with Fintech Startup to Explore Issuing Central Bank Digital Currency

West Indian fintech startup Bitt has entered a Memorandum of Understanding with Sint Maarten and the Central Bank of Curaçao to explore the possibilities and advantages of introducing a state-backed digital currency.

The bank is looking to reduce its reliance on paper-based fiat money in favor of a digital financial system for uninterrupted, fast and traceable transactions between the islands.

"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."

In contrast, digital currency is cheap to maintain, easy to create and transfer and small amounts can be easily held on mobile phone wallets, which allows for secure transfers.

In the same year, Bitt partnered with the Barbadian central bank to pilot several blockchain-based projects.

Bitt is a wholly-owned fintech subsidiary of Overstock.com, an online retailer that has put major weight and funding into blockchain.

While the CBCS shows noteworthy acceptance of implementing blockchain technology and tokenized money in its framework, the divisional director of the Dutch Central Bank said that he believes a CBDC can never work due to the volatility of cryptocurrencies and the possibility of customer risks.

"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 solutions. This would be beneficial to everyone."

Banks in developing regions are quick to embrace cryptocurrency in times of crisis.

The unnamed digital token will be used to transfer money anywhere in the world and help during foreign imposed sanctions, according to Alireza Daliri, deputy head of Iran's Directorate of Technology Affairs.