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  • COVID-19 Pandemic: A Test Of The Resiliency Of The ECCU’s Payment System


COVID-19 Pandemic: A Test of the Resiliency of the ECCU’s Payment System

Key Messages:

  • The COVID-19 pandemic has had an adverse effect on most aspects of our lives, including financial matters, and it has brought into focus the performance and resilience of the payment system, a critical enabler of financial stability in the ECCU.
  • Evidence indicates that, generally speaking, payments have been executed smoothly, a testament to the resilience of the payment system in the Eastern Caribbean Currency Union (ECCU).
  • The ECCB is mindful of certain frictions in the current payment system as well as the dynamism of the global payments landscape and has embarked on several initiatives to improve the efficacy and resilience of the payment system.

The payment and settlement system in the ECCU represents an important aspect of the financial architecture.  Against the backdrop of the pandemic, it is an opportune time to examine its resilience.  

The payment and settlement system is used to settle financial transactions through the transfer of monetary value.  Kindly see detailed definition provided by the BISPrior to the current pandemic, payment systems’ resilience focused mainly on the recovery of clearings and settlement activities especially in light of the September 11, 2001 tragedy which reverberated across the financial system as indicated by the US Treasury.  A resilient payment system was seen as one that could continue operating with little disruption in the face of a technical issue, natural disaster or even a terrorist act.  The COVID-19 pandemic has presented a very different type of disruption resulting in a definition of resilience expanding beyond system and operational uptime to include the dynamic flexibility of systems, products, processes and the workforce as expressed by Ernst and Young.

The network and technical infrastructure of the payment system in the ECCU has not been significantly affected by COVID-19 and did not feature prominently in assessing the resilience of the payment system.  Resilience was assessed mainly in relation to the diversity of products available in making payments, the flexibility of the workforce to assist in facilitating payments and the level of digitization associated with payments.

On the issue of diversity, one could ask, are sufficient payment options available to the citizens and residents of the ECCU?  In the four years preceding the pandemic, there had been a general shift towards electronic/digital (card transactions) in the ECCU (see Figure 1). 

Figure 1: Card Transactions
Source: ECCB

An assessment of Point of Sale (POS) transactions executed by indigenous banks prior to and during the pandemic shows a general increase in the use of POS over the years.  There was a general reduction in economic activity during the period immediately after the implementation of the first lockdowns in 2020 which resulted in a contraction in payment volumes (Figure 2).  

Figure 2: Point of Sale Transaction Volumes Executed by Indigenous Banks
Source: Caribbean Credit Card Company

While many financial institutions showed increased levels of liquidity, which positively impacted the payment system, COVID-19-related restrictions impacted the operations of several institutions.  The initial lockdowns resulted in persons (many low income and among the most vulnerable) holding cheques that they could not immediately cash.  This experience should serve as a wake-up call for all.  Indeed, there are better options.

At present, it is estimated that for every 10 (ten) payment transactions captured in payment system data in the ECCU, three (3) are settled by cheques.  This number is simply too high.  After all, cheques are expensive and relatively slow.  Furthermore, our region’s efforts to support a green economy should also serve as motivation for reducing the current high usage of cheques in our region.  Consider for a moment the cost to the environment resulting from the high volume of paper and other resources involved in the production of cheques.  This situation underscores the need for reducing the use of cheques to enhance the efficacy and resilience of the payment system (Figure 3).

Figure 3: Cheque Transactions
Source: ECCB

There have been indications of increased attempts to use credit and debit cards to engage in fraudulent transactions; the magnitude of these incidents are considered significant enough to warrant major concern.  According to EUROPOL, cybercriminals have been one of the groups skilled at exploiting the COVID-19 pandemic through scams and hacking into private accounts.  However, there is little evidence to suggest that there have been widespread occurrences of these practices in the ECCU.  

The payment system is a vital component of the financial infrastructure of a country and contributes to its economic development.  As a result, payment system development and modernisation will continue to feature prominently on the ECCB’s strategic agenda.  Indeed, one of the pillars of the ECCB’s new strategic plan, which will soon be launched, is Payments Modernisation and Financial Inclusion. This pillar will focus on four (4) strategic themes:

  • A new Payment System and Services legislation (already drafted);
  • Enhancement of the payment and settlement infrastructure;
  • Fostering financial inclusion (a survey will be undertaken in 2022); and
  • Strengthening the Payment System Oversight and Development Framework.

The ECCB launched a digital currency, DCash, as a faster, cheaper and safer payment instrument to address some of the current frictions experienced in the daily lives of ECCU citizens and residents.

 Call to Action:

  1. The payment system should be seen as a public good and low-cost payments should be available to all persons regardless of whether or not one has a bank or credit union account. As I often say: the payment system must work for all except illicit actors.
  2. Reduce the high usage of cheques and physical cash. Notwithstanding the seemingly resilient nature of the payment system in the ECCU, we ought not to forget the lesson of the pandemic.  Let us make greater use of digital payments.
  3. Make connectivity faster, affordable and reliable. Of necessity, governments need to work with the telecommunication companies and regulators.
  4. A whole of society approach is essential to enhance cyber hygiene and cybersecurity. In this regard, several initiatives are underway including under the World Bank-funded Caribbean Digital Transformation Project.


The ECCB acknowledges the contribution of Mr Francis Fontenelle, former Senior Banking Specialist, Banking and Monetary Operations Department, in the preparation of content for this blog.

About the Author

Timothy N.J. Antoine has been the Governor of the ECCB since February 2016. He is passionate about the socio-economic transformation of the Eastern Caribbean Currency Union (ECCU) and is a strong advocate for regional cooperation and collective action. Indeed, he regards them as critical enablers to shared prosperity for the people of the ECCU.

About the Eastern Caribbean Central Bank

The Eastern Caribbean Central Bank (ECCB) was established in October 1983. The ECCB is the Monetary Authority for: Anguilla, Antigua and Barbuda, Commonwealth of Dominica, Grenada, Montserrat, Saint Christopher (St Kitts) and Nevis, Saint Lucia and Saint Vincent and the Grenadines.


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