Central Bank Issues Caution on Non-Traditional Financial Services
The Eastern Caribbean Central Bank (ECCB) says while it supports financial innovation, it is cautioning citizens about getting involved in non-traditional initiatives they are not fully educated on.
In 2017, Montserrat announced it would be exploring the creation of a digital wallet with BITT Barbados. The ECCB has also said it is exploring a digital Eastern Caribbean currency with BITT as well.
In a statement released on its website, the ECCB said they are “aware of the emergence of several initiatives which compete directly with traditional financial services. These include but are not limited to: peer to peer lending, digital wallets, crowd funding ventures, crypto-assets and initial coin offerings (ICOs) in the Eastern Caribbean Currency Union (ECCU).
“Consistent with its growth and development mandate, the ECCB supports and encourages innovation and verily believes that financial innovation is essential as our region forges a path to socio-economic transformation. Indeed, it is based on this conviction that the ECCB Strategic Plan 2017-2021 provides for a FinTech pilot, which includes a digital EC currency and the modernisation of our payment systems.
“The ECCB is equally committed to its mandate of financial stability which aims to ensure the soundness and stability of the financial system. In this context, the ECCB is deeply concerned about the real possibility that ECCU citizens could suffer financial losses by getting involved in initiatives which they do not yet understand fully and, more importantly, are not regulated. Some of these offerings appear to be investment or securities business and ought to be regulated properly.
“Before involvement with these initiatives, citizens are advised to consider the following questions:
- What do I know about this service provider and the services being offered?
- Do I understand both the opportunities and the risks?
- Is this service provider regulated and by whom?
- Does this service provider have appropriate anti-money laundering (AML) controls?
- What dispute resolution mechanisms exists if there is a dispute with this service provider?
“The ECCB, in collaboration with domestic and other regional regulators, is reviewing existing laws to identify changes which may be required to ensure adequate regulatory cover for these initiatives thus supporting innovation, while ensuring consumer protection. In this process of review, the ECCB is also engaging service providers in the FinTech industry on how best to support financial innovation.
“The ECCB welcomes the views of the public on this matter. The FinTech service providers and the members of the public may send comments or suggestions to: firstname.lastname@example.org.
“Finally, the ECCB will provide periodic updates on its work on these issues.”