Dear Editor,
S/N editorial of Friday April 1st, 2020 was instructive in many respects. In a sense, the editorial was not only timely, it sounded alarm bells on a matter, although somewhat futuristic, should be of interest to all Guyanese. The issue we have been called to pay attention to has to do with the growth of the de-dollarization movement world-wide in the light of a corresponding growth of digital and crypto-currencies with over 18,000 cryptocurrency businesses world-wide, with 30 million cryptocurrency users around the world in a three trillion dollars global cryptocurrency market that includes Bitcoin, Dash, Ethereum, Maker and Dogecoin, all privately-owned and powered by blockchain technology, but not backed by a Central Autho-rity. In contradistinction, eight countries in the Eastern Caribbean minus Anguilla, have fully-backed Eastern Caribbean Central Bank (ECCB) Digital Currencies (CBDC) using blockchain technology. According to Kristalena Georgieva, Managing Director of the IMF, “The history of money is entering a new chapter.” And the US Federal Reserve in January 2022, published a paper titled; ‘Money and Payments: The US Dollar in the Age of Digital Transformation.’
That said, in its editorial, S/N, referring to the UK newspaper The i claimed that ‘Russia and China have it in their sights to bring an end to the domination of the dollar by means of a mixture of digital and cryptocurrencies and alternative payments’ and that ‘the present tough sanctions over Ukraine, while causing serious damage now, will give impetus to the de-dollarisation movement which in its turn will bring an end to US superpower status.’ However, as if in a push-back, the Biden Administra-tion, sensing the inevitability and over-powering surge of digital and crypto-currencies, globally and its growth within its borders, made public a Presidential Executive Order laying out a national policy for Central Bank Digital Currencies (CBDC’s). The Biden Administra-tion ‘wants an examination of the risks and benefits of cryptocurrencies and to explore a digital version of the US dollar.’ According to a WH.GOV fact sheet published on March 9, 2022, ‘Over 100 countries are exploring or piloting Central Bank Digital currencies (CBDC’s), a form of a country’s sovereign currency.’ It is not known whether Guyana is among the 100 countries engaged in this exercise. That aside, the White House Fact Sheet states that ‘Digital assets, including cryptocurrencies, have seen explosive growth in recent years, surpassing a US$3 trillion market capital up last November and from $14 billion just five years prior.’
The WH Fact Sheet further states that ‘Surveys suggest, that around 16 per cent of adult Americans – approximately 40 million people – have invested in, traded or used cryptocurrency.’ The White House Fact Sheet went on to state that the US President’s Executive Order ‘lays out a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit financing; US leadership in the global financial system; economic competitiveness; financial inclusion and responsible innovation.’ In the meantime, while we in Guyana are focusing, and quite justifiable so, on a host of pressing economic and social developmental issues, some CARICOM member states, in the absence of a regional policy on digital and cryptocurrencies, are forging ahead with their respective versions of a digital and/or cryptocurrency. Jamaica, for instance, cognizant of the fact that Bitcoins, privately generated by algorithms, are financially unsuitable for its economy and that blockchain technology would be unhelpful, or better put, can be ‘a legitimate disruptor’ that cannot be modified in support of the services sector in the case of payments, health care and cyber security. In the circumstances, Jamaica has gone ahead and rolled out its own digital currency known as ‘Jam-Dex.’ The Jamaicans made it clear that ‘Jam-Dex’ is separate and distinct from the approach taken by the Bahamian ‘Sand Dollar’ and the East Caribbean Central Bank (ECCB) rollout of DCash in Antigua and Barbuda, Grenada, and St. Kitts and Nevis.
‘Jam-Dex’ is reportedly, ‘a digital representation of the Jamaican dollar which can be issued to every Jamaican citizen especially those who are now financially excluded.’ Further, we are told that ‘Jam-Dex’ is a Central Bank Digital Currency or ‘Fiat Money ’ which is legal tender, unlike cryptocurrency which is privately issued generally, not backed by a central authority and does not perform all the essential functions of money.’ In this connection, the Jamaica model for phasing in its digital currency is instructive. A Central Bank Digital Currency Implemen-tation Committee (CBDCIC) was established to help pave the way for introducing a digital currency. The Bank of Jamaica (BOJ) kept the Jamaican people updated at every stage of the implementation process. I sincerely hope that Guyanese economists, bankers, CEO’s of financial institutions and policy makers have taken note, and at the same time, are cognizant of current global developments as well as the far-reaching implications a digital version of the Guyana dollar would have for the entire country. Assuming we will arrive at a BOG-backed digital dollar sooner rather than later, the expectation is that at the appropriate time, national consultations will be initiated on this ‘new frontier’ in Guyana’s financial architecture with a view to drafting consensual legislation that would secure unanimous approval and passage in the National Assembly.
Guyana’s economy is entering a new and challenging era. Potentially, some archaic aspects of our business landscape can be blown away while new and key areas will be built out. Fresh prospects will emerge for re-invigorating and expanding traditional and non-traditional productive sectors. The US ambassador hit the nail on the head when according to K/N (2.4.’22), she was quoted as saying that “oil revenues must drive economic diversification.” When all is said and done, it would not be unreasonable to expect, that at some point in time, a measured and calculated approach towards a fully-backed Bank of Guyana digital currency will be floated in anticipation of, and in step with global and regional trends to modernize and expand our central bank’s minting and issuance processes.
Sincerely,
Clement J. Rohee
