Cari­com is mov­ing clos­er to a re­gion­al pay­ment sys­tem that could al­low con­sumers and busi­ness­es to make in­stant cross-bor­der pay­ments in lo­cal cur­ren­cies, cut­ting trans­ac­tion costs and re­duc­ing re­liance on for­eign re­serve cur­ren­cies.

Re­gion­al cen­tral banks are ad­vanc­ing work on the pro­posed Cari­com Pay­ment and Set­tle­ment Sys­tem (CAPSS), with a pi­lot ex­pect­ed af­ter fur­ther con­sul­ta­tions and tech­ni­cal eval­u­a­tions in the com­ing months.

The Cen­tral Bank of T&T, in a news re­lease yes­ter­day, said, CAPSS is in­tend­ed to make re­gion­al pay­ments faster, cheap­er and more ef­fi­cient while strength­en­ing trade and eco­nom­ic in­te­gra­tion among mem­ber states.

The de­vel­op­ment re­ceived a boost this week when rep­re­sen­ta­tives of the Pan-African Pay­ment and Set­tle­ment Sys­tem (PAPSS) vis­it­ed Trinidad and To­ba­go to share lessons from Africa’s ex­pe­ri­ence in de­vel­op­ing and im­ple­ment­ing a re­gion­al pay­ment plat­form.

The Cairo-based PAPSS team met with gov­er­nors and of­fi­cials from re­gion­al cen­tral banks and mem­bers of the CAPSS Work­ing Com­mit­tees. Dis­cus­sions cov­ered gov­er­nance, op­er­a­tions, tech­nol­o­gy and stake­hold­er en­gage­ment as Cari­com cen­tral banks ex­am­ine the re­quire­ments for do­mes­tic and cross-bor­der pay­ments.

Dr Do­ri­an Noel, Deputy Gov­er­nor of the Cen­tral Bank of T&T and chair of the CAPSS Steer­ing Com­mit­tee, de­scribed the en­gage­ment as im­por­tant to the project’s de­vel­op­ment.

“The PAPSS ex­pe­ri­ence of­fers valu­able prac­ti­cal in­sights for the Caribbean as we con­tin­ue to ex­plore bet­ter op­tions for re­gion­al pay­ments that are less re­liant on our for­eign re­serve cur­ren­cies while at the same time of­fer­ing the ben­e­fits of im­proved pay­ment speed and re­duced cost for users,” said Noel.

He added: “CAPSS will be se­cure, ef­fi­cient, in­clu­sive and re­spon­sive to the needs of users.”

A key ob­jec­tive is to re­duce the fric­tion in­volved in mov­ing mon­ey be­tween Cari­com coun­tries, where trans­ac­tions can in­volve dif­fer­ent cur­ren­cies and pay­ment arrange­ments.

A func­tion­ing re­gion­al in­stant-pay­ment plat­form could al­low con­sumers and busi­ness­es to set­tle trans­ac­tions more quick­ly while re­duc­ing costs as­so­ci­at­ed with cross-bor­der trans­fers.

Noel linked the de­vel­op­ment to the re­gion’s wider eco­nom­ic in­te­gra­tion agen­da.

“A mod­ern and ef­fi­cient cross-bor­der pay­ments in­fra­struc­ture is crit­i­cal to deep­en­ing re­gion­al in­te­gra­tion and sup­port­ing greater trade and in­vest­ment with­in Cari­com.”

The PAPSS en­gage­ment pro­vid­ed re­gion­al of­fi­cials with prac­ti­cal ex­pe­ri­ence from Africa as they as­sess the op­por­tu­ni­ties, re­quire­ments and po­ten­tial ben­e­fits of CAPSS.

“While con­sid­er­able work re­mains ahead, this col­lab­o­ra­tion rep­re­sents mean­ing­ful progress,” Noel added.

The meet­ing was host­ed by Cen­tral Bank Gov­er­nor Lar­ry Howai and brought to­geth­er se­nior of­fi­cials from sev­er­al re­gion­al cen­tral banks.

Par­tic­i­pants in­clud­ed Cen­tral Bank of Bar­ba­dos Gov­er­nor Dr Kevin Greenidge, East­ern Caribbean Cen­tral Bank Gov­er­nor Tim­o­thy An­toine and Cen­tral Bank of The Ba­hamas Gov­er­nor John Rolle.

Noel, PAPSS rep­re­sen­ta­tives and mem­bers of the CAPSS Work­ing Com­mit­tees al­so took part.

Par­tic­i­pa­tion by Greenidge, An­toine and Rolle re­flects the lev­el of re­gion­al cen­tral-bank en­gage­ment with the pro­posed pay­ment sys­tem as Cari­com seeks to im­prove the move­ment of funds across bor­ders.

CAPSS is be­ing de­vel­oped against a back­drop of ef­forts to strength­en in­tra-re­gion­al trade and eco­nom­ic con­nec­tiv­i­ty. Eas­i­er and cheap­er pay­ments could sup­port busi­ness­es trad­ing across Cari­com by re­duc­ing some of the costs and de­lays as­so­ci­at­ed with cross-bor­der set­tle­ments.

Re­duc­ing de­pen­dence on for­eign re­serve cur­ren­cies is an­oth­er key el­e­ment of the pro­pos­al.

Rather than re­ly­ing as heav­i­ly on cur­ren­cies such as the US dol­lar to fa­cil­i­tate re­gion­al trans­ac­tions, CAPSS is in­tend­ed to sup­port pay­ments in lo­cal cur­ren­cies.

PAPSS pro­vides a use­ful ref­er­ence point for that work. Its ex­pe­ri­ence has al­lowed Caribbean cen­tral banks to ex­am­ine how a re­gion­al pay­ments plat­form can be struc­tured and op­er­at­ed, as well as the tech­no­log­i­cal and gov­er­nance is­sues that need to be ad­dressed.

The Caribbean sys­tem, how­ev­er, re­mains un­der de­vel­op­ment.

Project stake­hold­ers will con­tin­ue con­sul­ta­tions and tech­ni­cal eval­u­a­tions over the com­ing months as they work to­wards a CAPSS pi­lot.

That work will have to ad­dress the in­fra­struc­ture, gov­er­nance, op­er­a­tional, and stake­hold­er re­quire­ments nec­es­sary to sup­port a re­gion­al in­stant-pay­ment plat­form.

The even­tu­al ob­jec­tive is a sys­tem ca­pa­ble of sup­port­ing faster, safer and more cost-ef­fec­tive cross-bor­der trans­ac­tions for both re­tail and com­mer­cial users.