the bahamian payment system modernisation : advancing financial inclusion initiatives by john a rolle * governor * as prepared for delivery. central bank of the bahamas blockchain seminar 18 march 2019 introduction inclusive of a digital version of the bahamian dollar, the central bank of the bahamas has defined several evolved objectives for the bahamian payments systems. on some levels the bahamas is positioned to use new technology to accelerate this transformation. it brings into focus the need for new policies and regulatory reforms to address best practices in the digital supply of financial services, consumer protection in its multifaceted forms, cyber security, and more. there are multiple, complementary objectives within our digitisation and reform initiatives. these include : making the payments system more efficient. using technology to achieve more inclusive, cost affordable, even access to financial services, across all islands of the bahamas ; providing access that avoids discrimination on the basis of immigration or residency status. strengthening national defenses against uses of the financial services infrastructure for money laundering and other illicit ends ; including activities that thrive more easily in cash intensive environments. selected payments system indicators by international standards, the bahamas has a very developed financial system. however, the averages obscure gaps in who have access to services over our disperse geography, and the 1 | page inefficiencies that constrain services delivery. 12 banking presence is sporadic on the family islands, and absent altogether in a few cases. 3 at the national level, trends point to increasing use of electronic payments ( see box 1 ), but anecdotally the costs of settling transactions is a drag on the speed of change. 4 cost aside, accelerated change could be also encouraged through increased comfort around accepting and making digital payments ; and placing these capabilities universally within the reach of more consumers. 5 in 2018, the central bank conducted a baseline survey on financial literacy and garnered metrics that speak to financial inclusion, along the lines of templates used for the oecd countries ( table1 ). although this survey does not capture what is happening among undocumented persons, it indicates a high degree of awareness and high degree of access to basic deposit facilities in the bahamas. just above 90 percent of the respondents had knowledge of savings accounts and debit cards. yet, only about 80 percent of such persons had use of a savings account. 6 only about 70 percent of these individuals used a debit card ; and fewer than half possessed a credit card. improvements must be sought in all of these estimates, along with much higher rates

the decline in funding costs, these countries were expected to enhance their growth potential and solvency through the conduct of reforms in the labor markets, as well as tax and administration systems. in other words, the euro area was supposed to become a sustainable system only after going through such a process. these peripheral countries, however, expanded government spending excessively relying on low funding costs, and as a result public debt increased considerably, going far beyond their capacity to repay. on the other hand, germany has continued to steadily record current account surpluses by increasing exports to these peripheral european countries and to increase credit to such countries. thus, the essence of the problem is imbalances between euro area countries that have developed since monetary unification. therefore, it is necessary to fully understand that there is no immediate remedy to solve the sovereign debt problem and postponing the resolution of the problem will never bring back the pre - crisis bis central bankers ’ speeches situation. in short, some peripheral european countries need to seriously consider longlasting policy responses that would strengthen their medium - to long - term growth potential. how will the sovereign debt problem develop for the time being? given the extremely high degree of uncertainty it is difficult to predict future developments. many market participants seemingly hold the view that euro area countries will buy time and contain overreaction of the financial markets, which currently tend to be ruled by extreme pessimism, by gradually presenting a roadmap for fiscal transfer and fiscal integration and finding some way to compromise with one another to deal with individual domestic political problems. if the situation develops in accordance with this view, it is necessary to acknowledge that the high stress in global financial markets caused by the sovereign debt problem in europe will persist for a long time. the risk of some kind of shock triggering the spread of credit contraction also warrants attention. turning to the united states, an increasing number of recently released economic indicators have turned out to be better than market expectations and concern about a possible double dip or a negative spiral has receded compared with early spring and summer. however, improvement in the employment situation has remained slow and the pace of economic recovery has remained extremely moderate. in such a situation where the average growth rate has declined, various economic indicators have shown large fluctuations and differences among industries and firm size. therefore, it has become difficult to capture the underlying trend. this difficulty has heightened uncertainty regarding the u. s. economy, and is one reason for the increasing short - term fluctuations of sentiment. in any