Caribbean Central Banks Test New Payment System

ECCB Leads Regional Push for Caribbean Payment System

Four Caribbean central banks are working together on a pilot project to create a regional payment system that reduces dependence on the US dollar for trade and remittances.
The Eastern Caribbean Central Bank (ECCB) is leading the initiative, called the Caricom Payment and Settlement System (CAPSS). The goal is to make cross-border payments faster, cheaper, and easier within the region. ECCB Governor Timothy Antoine announced the project at the Africaribbean Trade and Investment Forum in Grenada.
The pilot will start with Barbados, The Bahamas, ECCB member states, and one other country, which will confirm its participation soon. Antoine said the team will test the system first, then expand it to the rest of Caricom.

Real-Time Payments in Local Currencies Through the Caribbean Payment System

CAPSS will let people send and receive payments in their own currencies, in real time, without going through expensive US-based correspondent banks. The system is based on the Pan-African Payment and Settlement System (PAPSS), launched in 2022 by the African Export-Import Bank and the African Union. PAPSS connects central banks, commercial banks, and payment providers to handle secure cross-border transactions in African currencies.
Countries using PAPSS include Nigeria, Ghana, Kenya, Zimbabwe, and Egypt. By following this model, the Caribbean can strengthen financial independence and boost regional trade.

A potential breakthrough for trade and remittances

With CAPSS, a payment from Grenada to Guyana could be settled directly in Eastern Caribbean dollars and Guyanese dollars. Central banks and the African Export-Import Bank will act as settlement agents. This change could lower costs, speed up transactions, and make trade more efficient.

“We cannot continue to rely on correspondent banks, particularly from the US,” Antoine said. “In day-to-day transactions, traders will be trading in local currencies. That, we believe, is a potential breakthrough.”

Next steps: Linking Caricom and Africa

The second phase will connect CAPSS to Africa, allowing direct currency exchanges between Caricom and African nations. This link will make trade across the Atlantic smoother and cheaper.
Earlier this year, the Central Bank of Barbados and the Central Bank of The Bahamas ran a successful proof-of-concept. Now, the ECCB is working with the Committee of Central Bank Governors to bring CAPSS to more countries.

“This is a concrete example of using our shared pain to create shared prosperity,” Antoine said. He thanked Afreximbank for laying the foundation for CAPSS.

US dollars will still play a role in background settlements between central banks. However, everyday payments will use local currencies;a shift Antoine calls a key innovation with the power to reshape regional finance.