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Commonwealth Small States Prioritise Financial Inclusion and Lead the World on Central Bank Digital Currencies

11 October 2021

Today at their annual meeting, Commonwealth Central Bank Governors explored ‘Financial Technology for Economic Recovery’ and particularly the use of Central Bank Digital Currencies, a new technology that could give the most vulnerable in societies around the world better access to financial services.

Speaking at the opening of today’s virtual Commonwealth Central Bank Governors Meeting, Commonwealth Secretary-General, the Rt Hon Patricia Scotland QC said:

“As Commonwealth countries strive to rebuild our economies after COVID-19 we have an important opportunity to lay the foundation to create a resilient and inclusive future – one which helps to address the multiple challenges of climate change, poverty and income inequality. Technology has helped us weather these challenging times and equally it can help with recovery.

“FinTech can support the inclusion of the most vulnerable, such as those without access to bank accounts and lending. However, for FinTech to adequately support inclusive recovery, there needs to be a regulatory environment that supports its growth and development,”

Small States lead the way

Commonwealth Small States have led on the use of Central Bank Digital Currencies (CBCDs), with the Bahamas being the first country in the world to launch a CBDC, the Sand Dollar, in October 2020.

The growth of CBCD’s is an issue of growing importance across the Commonwealth and the world. Of the 54 Commonwealth countries, 26 have announced intentions to either research, develop, pilot or launch CBDCs. A 2020 survey of central banks found that 86 per cent were engaged in investigating CBDCs.

In the first four months of 2021, Bermuda, Jamaica and the UK announced they were exploring launching a CBDC. The Eastern Caribbean Central Bank (ECCB) in April 2021 became the first to launch a CBCD across multiple countries. Nigeria is piloting the CBDC – eNaira - in the last quarter of 2021. Whilst Singapore, Malaysia, South Africa and Australia are all involved in a pilot project in cross border CBDC transactions.

Need for better financial literacy

During today’s meeting, Commonwealth Central Bank Governors shared their experiences and lessons learned from implementing CBDCs in their regions. They expressed a need for better financial literacy, capacity building of citizens and support for small businesses, particularly on how to utilise technology to cope with crises.

To help bolster capacity development for fintech professionals in Commonwealth governments, the Commonwealth Secretariat has partnered with the Universities of Oxford and Cambridge to fund the participation of member states on fintech courses. To date, 120 officials from 43 Commonwealth countries and all 5 Commonwealth regions have participated in the Commonwealth Fintech Training Programme. The Secretariat has also developed the Commonwealth Fintech Toolkit to help Commonwealth countries to identify which policy interventions may make sense regarding Fintech and how to implement these decisions.

The Commonwealth Central Bank Governors Meeting comes ahead of the Commonwealth Finance Ministers Meeting which will be held virtually tomorrow and will focus on Supporting Economic Recovery in the Commonwealth.