Central Bank Governor: TT ready to go digital and cashless

CENTRAL Bank Governor Dr Alvin Hilaire said he is confident in citizens’ ability to adapt to the coming technological changes as the country moves to becoming a cashless society.

“I think that Trinidadians and Tobagonians are very sharp and very attuned to things and the transition would be very easy,” Hilaire said during a media briefing to introduce new polymer bills which will come into circulation next month.

The new $5, $10 and $20 bills are expected to be introduced early in November and new $1 and $50 bills are expected to come on stream next year. The bills are expected to go into circulation along with the current cotton bills, which tentatively could be phased out at the end of next year.

Speaking on digitisation, Hilaire said for the transition to be smooth a few fundamental issues must be addressed.

“The first is public education, because people may not be familiar with the new technologies. Second, their comfort level may not be strong because it is unfamiliar and because they have been burned. So we have to have a system whereby we have strong internet security redress if you have problems.”

Hilaire said Central Bank is working closely with the TT Financial Centre (TTIFC) and other bodies to move ahead with digitisation.

Thus far, several aspects to moving TT to a digital economy have already been put in place. The first was the e-money policy, which was approved as law on August 4.

Regulators, which include Central Bank, the Securities and Exchange Commission and the Financial Intelligence Unit, also developed an innovation hub accessible to the public on each of their websites. These give guidance for proposed financial technology products and services.

Thirdly, a regulatory sandbox was launched to give a platform for financial entities to test their fintech products and services.

Using the demonetisation of the cotton $100 bill as an example, Hilaire said TT citizens adapted to the transition much more quickly than first expected.

He was surprised that people were still keeping large amounts of cash stashed away at home, and said it suggested that more public information needs to be shared on the benefits of using financial institutions. But he added that the demonetisation (removal from circulation) exercise had the positive effect of encouraging people to use the banks, and, after the fact, use digital transactions instead of cash payments.

“Because people were trying to get rid of their cotton notes, they ended up using more Linx transactions and credit-card transactions and they kind of morphed into this comfort zone. We have found over time that there has been a reduction in the use of cheques and an increase in the use of credit-card and debit-card transactions.”

But digital transactions still need to be encouraged. Automatic clearing-house transactions (ACH), a method of transferring funds from one bank to another usually used in salary payments, are one of the digital methods that needs to be encouraged, Hilaire said.

“Government is a big part of this. They are trying to move along with electronic transactions. Some of the legislation still needs to be updated.”

Hilaire said several strides had already been made to move the country toward digitisation of the economy to make TT citizens less dependent on notes and coins. The polymer notes were also acquired because they were more cost effective, Hilaire said.

“They cost a bit more – each note costs about 50 per cent more – but it lasts about two and a half times longer. So you see, the balance is you would be able to get more bang for the buck.” The transition from cotton to polymer $100 bills was part of a controversial demonetisation process at the end of last year for national security purposes as a means to destabilise criminal operations and force people with extraordinary amounts of cash to explain their wealth.

The new notes will maintain the same colours, feature local birds and flora and will bear similar themes to the old cotton notes, such as the market scene on the $5 bill or the oil derrick on the $10 bill – but they will also have new features. These will include a smoother, more durable material, raised prints for the visually impaired and security features like micro print labels and features which can only be seen under ultraviolet light.

Hilaire also announced that Central Bank will launch a study soon to determine the feasibility of keeping five-cent coins in circulation. One-cent coins were removed in 2018.

Hilaire said the one-cent pieces’ demonetisation was done because the cost of minting the coin was more than the value of the coin itself. This new study, expected to take a couple of months, will determine if a similar fate is in store for the five cent piece.

“We know that for sure we are using a lot of notes and coins, and we really want to get away from that as a country,” Hilaire said.

The study would be part of many efforts to make sure that acquiring TT currency is more cost-effective. In other coins, for example, the Central Bank also changed the metallic composition so they use less precious metals and are no longer magnetised.