CARICOM prepares local-currency payments

Keypoints:

CARICOM prepares a PAPSS-inspired system
Additional central banks will join pilot
Mahama links payments to wider trade

CARIBBEAN central banks are advancing a payment system inspired by Africa’s PAPSS platform, potentially laying the financial groundwork for President John Dramani Mahama’s proposed expansion of trade between Africa and the Caribbean.

The initiative matters because political declarations cannot create a commercial corridor alone. Businesses also need affordable cross-border payments that do not require every transaction to pass through US-dollar correspondent banks.

Mahama links payments to trade

Speaking alongside Jamaican Prime Minister Andrew Holness in Kingston on August 2, 2026, Mahama said stronger trade would require deliberate investment rather than rhetoric.

‘We don’t kid ourselves that you snap your finger and suddenly our trade volumes will go up. We need to work at it,’ Mahama said during a joint media engagement in Kingston.

His remarks formed part of a wider proposal to secure Caribbean access to the African Continental Free Trade Area and establish practical systems for moving goods and settling payments between the two regions.

Mahama said participating countries should eventually be able to pay in their own currencies, with digital settlement reducing the need to convert each transaction into an external currency.

CARICOM moves towards CAPSS

The Caribbean has already begun building the necessary infrastructure. In October 2023, governors of all 11 CARICOM central banks unanimously selected the Pan-African Payment and Settlement System as their preferred model for intra-regional trade payments.

Central Bank of Barbados Governor Kevin Greenidge said the region looked forward to working with Afreximbank to ‘further explore and implement the PAPSS model for intraregional trade transactions’.

That work has developed into the CARICOM Payment and Settlement System, known as CAPSS. It is intended to provide real-time, low-cost cross-border payments in local currencies while reducing reliance on correspondent banks.

The central banks of Barbados and The Bahamas have completed a proof of concept. Eastern Caribbean Central Bank Governor Timothy Antoine said the next step was to ‘bring additional central banks on board; at least two others for the initial pilot’.

The project therefore remains at the pilot stage rather than being commercially operational throughout CARICOM.

Africa’s system expands

PAPSS was formally launched in Accra in January 2022 by Afreximbank, working with the African Union and the AfCFTA Secretariat.

The system allows participating financial institutions to settle cross-border transactions in local African currencies, reducing the need for payments to be converted into dollars or other external currencies.

Following the Bank of Central African States’ entry in July 2026, PAPSS said it could facilitate payments across 28 African countries, connecting more than 190 commercial banks and fintech companies through 16 payment switches.

The integration of financial institutions across the six-member Central African Economic and Monetary Community is expected to continue through the end of 2026.

Africa Briefing has reported that PAPSS is becoming central to Africa’s payments infrastructure as governments seek to reduce delays, fragmented banking links and dependence on external intermediaries.

CAPSS would apply a related model to Caribbean commerce. Its wider significance lies in the possibility that African and Caribbean payment systems could eventually support direct transactions between the regions.

Dollar reliance remains a hurdle

Most trade within CARICOM is still denominated in US dollars, according to the Eastern Caribbean Central Bank. This creates foreign-exchange costs and leaves businesses dependent on correspondent banks.

A local-currency platform could lower those barriers for smaller companies, but it would not remove every risk. Regulators must still address settlement guarantees, exchange-rate exposure, liquidity, anti-money-laundering controls and technical interoperability.

Similar payment barriers continue to slow African trade despite AfCFTA’s effort to build a more integrated continental market.

What happens next?

The immediate test is whether CARICOM expands the CAPSS pilot and establishes a timetable for commercial use.

Afreximbank’s decision to raise its CARICOM financing limit from $3bn to $5bn gives the broader partnership additional institutional support.

If the pilot succeeds, Africa and the Caribbean will possess the beginnings of a practical financial bridge capable of turning historical ties into measurable trade.