The Eastern Caribbean Central Bank (ECCB) is warning customers in the sub-regional Organisation of Eastern Caribbean States (OECS) to be cautious against using non-traditional financial services saying that they could suffer “financial losses by getting involved in initiatives which they do not yet understand fully”.
In a statement, the ECCB said that “these include but are not limited to peer to peer lending, digital wallets, crowdfunding ventures, crypto-assets and initial coin offerings (ICOs) in the Eastern Caribbean Currency Union (ECCU)”.
The ECCB, which serves a s a central bank for Antigua and Barbuda, Dominica, Grenada, St. Lucia, St. Vincent and the Grenadines, St. Kitts-Nevis, Montserrat and Anguilla, said consistent with its growth and development mandate, it supports and encourages innovation and verily believes that financial innovation is essential as the Eastern Caribbean region forges a path to socio-economic transformation.
“Indeed, it is based on this conviction that the ECCB Strategic Plan 2017-2021 provides for a FinTech pilot, which includes a digital EC currency and the modernisation of our payment systems,” it said, adding that the ECCB is equally committed to its mandate of financial stability which aims to ensure the soundness and stability of the financial system.
“In this context, the ECCB is deeply concerned about the real possibility that ECCU citizens could suffer financial losses by getting involved in initiatives which they do not yet understand fully and, more importantly, are not regulated. Some of these offerings appear to be investment or securities business and ought to be regulated properly,” the statement noted.
It said before involvement with these initiatives, citizens are advised to consider the following questions, what do they know about this service provider and the services being offered, whether they understand both the opportunities and the risks and whether the service provider is regulated and by whom.
Other questions include whether the service provider has appropriate anti-money laundering (AML) controls and what dispute resolution mechanisms exists if there is a dispute with this service provider.
The ECCB said that in in collaboration with domestic and other regional regulators, it is reviewing existing laws to identify changes which may be required to ensure adequate regulatory cover for these initiatives. In this process of review, the ECCB is also engaging service providers in the FinTech industry on how best to support financial innovation, it added.
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