THE Central Banks of Barbados and the Bahamas have successfully processed a cross-border payment using their respective currencies without the need for an intermediary currency.
Speaking to Express Business, key stakeholders hailed this as a significant breakthrough, emphasising its potential to help Caribbean Community (Caricom) nations trade with less reliance on the US dollar and other third-party currencies.
They noted that this development paves the way for greater financial independence in regional trade.
A representative from Trinidad and Tobago’s Central Bank was present to witness the real-time transactions in local currencies within Caricom, as this country looks for solutions to ongoing challenges in accessing foreign exchange.
“From February 19-21, 2025, at the Central Bank of The Bahamas, representatives from the central banks of The Bahamas, Barbados, Suriname, and Trinidad & Tobago, along with Afreximbank (The African Export-Import Bank), PAPSS (the Pan-African Payment and Settlement System), and Montran Corporation, successfully tested CAPSS’s (the Caricom Payment and Settlement System’s) ability to process instant cross-border payments without intermediaries,” Afreximbank stated.
CAPSS, designed to facilitate real-time, local currency transactions across the Caricom region, aims to replicate the success of PAPSS, which enables instant, cross-border payments in local currencies across African markets.
Afreximbank hailed the proof of concept as groundbreaking, noting key benefits such as secure, real-time, local currency transactions within Caricom and central bank-backed settlement.
The successful live test between the Bahamas and Barbados was cited as proof of the possibilities for a more integrated and self-reliant regional financial system.
‘The sooner the better’
Speaking to Express Business last week, Governor of the Central Bank of Barbados Dr Kevin Greenidge stated that the sooner CAPSS becomes fully operational across the region, the better it will be for Caricom nations.
“It will allow a trader in Trinidad to pay for goods in Barbados using TT currency, and the trader in Barbados would receive Barbados currency. Similarly, a trader in Barbados can pay for Trinidadian goods in Bajan currency, and the Trinidadian trader would receive Trinidadian currency. Why? Because the Central Bank of Trinidad and Tobago and the Central Bank of Barbados will hold reserves for each other,” Greenidge said.
“And at the end of the day, we will net out and determine the position after settling—whether it’s in Trinidad’s favour or on Barbados’ side—and we can settle with US dollars. The beautiful thing is that you require fewer US dollars in day-to-day activities, allowing us to use the US dollars we have for other purposes. That’s the beauty of it,” Greenidge said.
Greenidge hailed the test that was done in February, and called for others to come on board.
“We were able to test it; there are teething issue we have to work out. Suriname joined as an observer to see how it would work. It would be great to get others on board to give us the necessary critical mass to push this forward,” he said.
“The truth is we are pushing it—the soon the better,” Greenidge said, speaking on the sidelines of the groundbreaking ceremony for the Afreximbank African Trade Centre in Barbados on March 24.
“We’ll probably discuss it further at our next Caricom central bank governors’ meeting, and then we’ll take it from there,” Greenidge said.
“It’s not a lack of will—I know there is willingness. All of us have different systems and structures, and we need to work out the benefits for each other and how it will work together. But that’s the idea behind it,” he said.
The next bi-annual meeting of Caricom central bank governors is carded for next month.
Acting chief operating officer at Afreximbank’s Caribbean office Okechukwu Ihejirika
‘We are optimistic more than ever’
Acting chief operating officer at Afreximbank’s Caribbean office Okechukwu Ihejirika told Express Business that CAPSS is designed to promote trade within the region and eliminate some of the existing hurdles.
“If for instance I am in Barbados and I want to buy goods from Trinidad and I don’t have the US dollars to make that payment, then it becomes simply wishful thinking…we think that stifles trade,” Ihejirika said.
“We thought it was very critical to put in place an alternative payment platform,” he said.
Ihejirika said that with CAPSS, the vision is to do trade between Caricom countries without the vendor or buyer having to use an intermediary currency to complete their transaction.
“The platform will facilitate settlement at the end of the day. So, at day’s end, we would assess the receivables from countries A, B, and C, determine the net position, and settle that amount—eliminating the need for individual settlements,” he said.
“Ultimately, this will lead to faster payments because transactions can now be processed rapidly without delays. It can essentially function as an instant payment system—just like walking into a supermarket in Port of Spain, swiping your card, making a payment, and walking out with your goods. It becomes easier, instant, and faster, while also reducing complexity and easing the foreign exchange pressure on each country’s financial system,” Ihejirika said.
Ihejirika said this would eliminate the reliance on third-party currencies such as the US dollar, euros, Japanese yen, and others.
“We can conclude the trade with our local currencies, send our local currencies, receive our local currencies and everybody is happy,” he said,
Ihejirika said regional central banks are leading the discussions on CAPSS.
“It is exciting because actually it is the same thing with Africa. Once it came in, everybody saw the value in it, and everybody was impressed with it. So when we came here as well, everybody said it made sense. So the Central Bank Committee of Governors accepted it and then referred it to a subcommittee, which is interestingly led by the deputy governor of the Central Bank in T&T,” he said.
Ihejirika said following the successful transaction in February, it has is now been agreed to move to the next phase.
“So we are getting closer and closer to the full launch of CAPSS,” he said.
“We are optimistic more than ever that this is going to see the light of the day,” Ihejirika said.
In October 2023 all 11 regional central banks unanimously adopted PAPSS as the preferred system for processing the settlement of intra-regional trade transactions.
“The governors have indicated their recognition of Afreximbank’s experience and skill in using PAPSS to streamline cross-border financial transactions throughout Africa. Consequently, Afreximbank will provide valuable guidance and support throughout the entire implementation process of PAPSS in the Caribbean region,” said a 2023 release.
“Operational in the six countries of the West African Monetary Zone (WAMZ)—and with transactions initiated daily by traders, SMEs and individuals—PAPSS is gaining traction on the African continent as a transformative solution enhancing the operational efficiency of cross-border payments, while promoting economic integration and trade facilitation. Indeed, more African central banks stand poised to join the network, and recently five major African multinational commercial banking groups present in almost 40 countries have decided to implement the system in all their subsidiaries across Africa. With the inclusion of the Caricom region, the system’s reach expands beyond the African continent, and its status as a global payment and settlement platform is solidified,” it stated.
