The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank’s governor yesterday said he is aiming to “leapfrog The Bahamas to an even better digital payments state” as he warned: “This is a train that is not going to stop.”

John Rolle, addressing the regulator’s 2023 third quarter economic briefing, said it was “incumbent” on the financial services sector to develop an electronic payments system that Bahamians trust “if we’re going to be plugged into the rest of the world” at the same product and service standards.

Asked by Tribune Business how the Central Bank and private sector plan to move forward, after the year-end 2024 deadline to eliminate manual cheque use was abandoned to give consumers more time to adjust, he added that there is no stopping the digital evolution despite the “hang ups” caused by telecommunications and electricity outages.

Mr Rolle added that the steering committee appointed to oversee the shift away from cheques, featuring Central Bank, banking industry and business executives, remained focused on educating Bahamians to ensure they are “comfortable” transitioning to digital payments given that such momentum cannot be halted.

“The focus is on giving the public more time to transition to alternative methods of payment, as well as to hunker down and get even more targeted improvement in the state of the alternatives,” the Central Bank governor said of the decision to delay cheque elimination by at least two years until 2026.

“At the steering committee level focusing on cheques, we are looking at how we can leapfrog The Bahamas to an even better state of affairs in terms of the digital payments space. I know one of the refrains is around the telecommunications infrastructure etc. In spite of these hang ups, it’s still incumbent that we build the payments system out to the standards that align The Bahamas with what’s happening in the rest of the world.

“Our focus is to get improvements in the space so the public can see the alternative to cheques,” Mr Rolle continued. “There has been quite an amount of improvements that have have happened, even in the online transfer system that banks use. 

“Separate and apart from improving the system, using the information we have around online users still not fully comfortable going digital, [we will be] providing more information around how to be safe in the world of digital finance. This is a train that is not going to stop based on our personal level of confidence.”

The Central Bank and its commercial banking licensees have been pushing consumers towards increased use of online and other digital platforms as a means to conduct all payment transactions, arguing that these mechanisms are less costly, more secure and offer Bahamians more convenience as opposed to queuing in long lines at physical branches.

The COVID-19 pandemic accelerated the transition to electronic banking in both The Bahamas and rest of the world, and the Central Bank has launched initiatives such as the Sand Dollar, the Bahamian digital currency, to further speed up adoption. However, a substantial number of Bahamians continue to rely on both branch visits and cash as their main means for conducting financial transactions.

“It’s incumbent on us to prepare the Bahamian banking public for more of the change, and the changes that are happening are also international,” Mr Rolle said. “If we’re going to be plugged into the rest of the world, at the level the rest of the world is moving with digital payments, we’re also going to have to make certain advances in our digital payments space.”

He added that the Central Bank and steering committee will have this as “a motivation and focus” in the near-term, after the latter’s members formed a “consensus” that more time is needed to ready and educate Bahamians for the elimination of cheques and consequent shift to electronic payments.

After extensive stakeholder consultation, the Central Bank of The Bahamas has agreed with commercial banks and other stakeholders on a reassessment of priorities regarding use of cheques in The Bahamas, while accelerating modernisation of the digital payments infrastructure,” the Central Bank’s statement earlier this month said.

“Based on wide stakeholder feedback obtained by the Steering Committee, consensus has emerged to adjust the medium-term strategic mandate for use of cheques. Specifically, the timeline to effect the policy for use of cheques will be deferred from the original target date of December 2024.

“A reassessment of progress in the payments system, and the policy for use of cheques, will be made in 2026. In the interim, milestones are being identified to strengthen universal access to enhanced efficiency in payments across all deposit taking institutions and payment services providers, including use of the Sand Dollar [Central Bank-backed digital Bahamian dollar].”

Meanwhile, Mr Rolle yesterday pledged that the retail savings bond, a product designed to foster a greater “savings culture” among Bahamians, will be launched before year-end 2023 as the initiative moves into its public education stage.

“On the savings bond we do anticipate that the launch is going to happen in 2023,” he said. “All of the technical work around that process has been completed, and our focus can now turn to public education and outreach.”

Targeted at small individual or retail investors, the savings bond aims to boost their capital markets participation by allowing them to purchase government bonds - known as Bahamas Registered Stock (BRS) - in regular, smaller and potentially more affordable increments than larger institutional buyers.

As for the launch of competitive bidding for the Government’s Bahamas Registered Stock (BRS) offerings come January 1, 2024, Mr Rolle added that this will provide greater pricing transparency and make the process more responsive to market demand.

“The Treasury Bills in The Bahamas have always been sold through an auction process, and that adds to transparency around the pricing and helps to gauge very directly the market demand for those instruments relative to costs,” the Central Bank governor explained.

“So allowing the auction mechanism to be used for registered stocks extends the transparency of the process and it gives the Government more direct feedback in terms of market sentiments even though the Central Bank presently does provide some guidance as to what the pricing should be. This will allow that process to be more transparent and directly attached to what market participants are expressing.”