The pilot will see the issuance of a digital version of the Eastern Caribbean dollar that will be distributed and used by licensed banks and non-banks in the Eastern Caribbean Currency Union (ECCU).

The digital currency, called DXCD, will be used for financial transactions between consumers and merchants, including peer-to-peer transactions, via smart devices. This means that, for example, a person in St Kitts and Nevis will be able to send DXCD from their phone to a friend in Grenada in seconds and for free.

The pilot begins this month with 12 months of development and testing, before a six month period of rollout and implementation in pilot countries.

ECCB governor Timothy N J Antoine says: "This is not an academic exercise. Not only will the digital EC Dollar be the world’s first digital legal tender currency to be issued by a central bank on blockchain but this pilot is also a live CBDC deployment with a view to an eventual phased public rollout."

The ECCB says that the pilot is part of a strategic plan to slash cash usage within the ECCU by half by 2021 and promote financial stability and economic growth.