The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Central Bank’s governor yesterday conceded that plans to eliminate the use of cheques by end-2024 are “not as simple as flipping a switch” given the resistance encountered thus far to the move.

John Rolle, addressing the regulator’s 2022 full-year and fourth quarter economic briefing, admitted that not all feedback and consultation received by the Central Bank was “receptive to change”. He added that it was in talks with the Government “around how that process looks” as it continues to push for modernisation of The Bahamas’ payments system through the increased use of digital transactions.

Noting that public education and outreach initiatives are planned to persuade Bahamians on the merits of eliminating cheques as a form of payment, he added that the Central Bank will be forming a steering committee featuring industry stakeholders - the commercial banks, credit unions and insurers - to drive the process with a focus on three so-called “key performance indicators”.

Asserting that the Central Bank “understands” the concerns over, and opposition to, cheque elimination, Mr Rolle said: “It will focus on kind of key performance indicators that we should be targeting for improvement as we move to reduce the use of cheques and even reduce the use of cash.

“These initiatives would include increasing the focus on the speed at which transactions are being settled in the electronic funds transfer space, looking at the cost to be transacting relative to alternative [payment methods] and the relative speed at which the public are migrating to digital payments.

“Wrapped up in that is not just the issue of how the public are migrating, but the general financial inclusion with it so we address the access issue. These are three very important key performance indicators we will be targeting and tracking in the coming months and years to make certain of meaningful progress towards our end goals.”

Mr Rolle said the Central Bank was also assessing what reforms need to be made to the payments system’s legislative and regulatory framework to facilitate such changes, and added of the cheque elimination strategy: “It is appreciated it’s still a very sensitive issue and it will not be as simple as just a flip of the switch.”

The Governor added that Bahamian payment providers are working towards an end-2023 first quarter target of enabling all persons holding Sand Dollar accounts to transfer funds seamlessly between their online fiat bank accounts and electronic wallets holding the Central Bank Digital Currency.

“One of the things I want to say also, so people get it very clear, is that it’s about making sure that every person in The Bahamas has legitimate options and means to receive payments digitally. Whether they choose to do so or not, they legitimately need the ability to do so,” Mr Rolle added. “That’s not the case at the moment in The Bahamas.”

Access to digital payment options currently depends on location, and the island that Bahamians are living on, as well as their ability to access the Internet via computer or mobile phone. “Cash is not going anywhere soon. Our goal is to encourage the reduction of cash,” the Governor added. “The Family Islands, we need to allow them to participate on the same level playing field as those that have the same convenience in New Providence and other economic sectors.”

Mr Rolle, meanwhile, said it was hard to determine if inflation rates in The Bahamas have peaked yet. “Average inflation rates in The Bahamas are lower than in the US,” he added. “To the extent we trail the US, we could certainly see further rises in inflation before they taper off.”

GIven that The Bahamas imports virtually all it consumes, Mr Rolle said a prolonged period of heightened inflation will suck up a greater proportion of The Bahamas’ foreign exchange earnings to finance consumption habits. Spending and business investment could also be negatively impacted, and he added that it was vital to manage inflationary expectations so that inflation does not become a “self-sustaining” spiral driven by both price and wage increases.