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Jamaica to Launch Central Bank Digital Currency in 2022

Jamaica’s Minister of Finance Nigel Clarke has announced that the country intends to launch its central bank digital currency (CBDC) in 2022.

During the National Budget Debate address, Clarke revealed that the Central Bank’s digital currency will be tested in December, ahead of its launch.

The government of Jamaica disclosed that in light of Covid-19, a swift transition to a digital society will be crucial for the economy to recover. Enter central bank digital currencies.

Clarke added that a CBDC will greatly improve financial inclusion and provide financial services to the nation’s unbanked population. He specified that although a virtual currency backed by the central bank of Jamaica (BoJ) will be released, it will differ from cryptocurrencies and the CBDC should not be considered as one. Clarke said:

“It is not to be confused with cryptocurrency, which is privately issued and not backed by a regulatory authority.”

The CBDC issued by the central bank of Jamaica will be made interchangeable with the Jamaican dollar on a one-to-one basis, therefore adopting more stablecoin-like characteristics.

Since the beginning of 2020, Jamaica has been working on developing its own central bank digital currency. In June 2020, BoJ tested and developed potential CBDC solutions in its sandbox.

CBDC issuance by different countries

Currently, the first country to have officially rolled out a functional central bank digital currency is the Bahamas. The Central Bank of the Bahamas announced the world’s first state-backed virtual currency, dubbed the Sand Dollar, in October 2020.

The COVID-19 pandemic seems to have accelerated the timeline for CBDC issuance by central banks. Many countries have announced that they have been experimenting and working on developing their own digital currency.

China’s digital currency electronic payment (DCEP) is being piloted in major cities across the country. It aims to expand its growth as an economic powerhouse by piloting the CBDC at the Olympic Winter Games Beijing 2022.

The Bank of Jamaica Suggests Court Order Approval Required for Tracking CBDC Transactions

The Bank of Jamaica (BOJ) suggests that the authority must obtain a court order to track Central Bank Digital Currency (CBDC) transactions apart from wallet holders and issuers, as CBDC such emerging digital currencies that do not have a separate code that can be traced.

Jamaica Observer reported Wednesday, citing the BOJ said the central bank digital currency (CBDC) has a digital footprint and therefore has tracking capabilities. It is necessary to protect data privacy for the customers.

The Central Bank of Jamaica outlines that:

“However, this information is not shared with the Bank of Jamaica and any other authority due to customers’ confidentiality and data protection. This information can only be shared under a court order. Bank of Jamaica will only capture general data for economic analysis.”

CBDC is a digital form of legal tender issued by the central bank of the country, which stands for Central Bank Digital Currency and represents the digital form of a nation’s fiat money (currency backed by trust or faith in the regulating government). Unlike traditional cryptocurrencies, cryptocurrencies are usually issued by private companies without the endorsement of the state. Therefore, Jamaica’s CBDC can have the same payment and savings functions as cash.

BOJ stated that due to the characters of its CBDC, it would circulate in a larger area without incurring the cost of producing banknotes and coins.

Jamaica’s Minister of Finance Nigel Clarke has announced that the country intends to launch its central bank digital currency (CBDC) in 2022.

As reported by Blockchain.News on August 11, the project, under development by the BOJ’s CBDC Team, has entered a pilot phase which will see a total of $230 million in CBDC minted and deposited with deposit-taking institutions and authorised payment service providers before December 2021.

Bank of Jamaica Collaborates with Local Government to Expand CBDC Adoption

In a recent update, it was reported that the Bank of Jamaica is set to partner with the Government to boost the adoption of its central bank digital currency, JamDex, as a payment method.

Citing the report on Sunday, Jamaica’s CBDC expansion began this year via a mobile wallet provider, Lynk, and up to the end of September, this brought about 115,000 subscribers who have executed 146,000 transactions.

However, considering the number of people expected to interact with the Financial sector in a country, that number seems relatively low.

Dr. Novelette Panton, division chief Financial Markets Infrastructure Division, Bank of Jamaica, in a conference addressing “Digital Currency,” stated that bringing more people into the financial system is one of the main reasons for establishing CBDC, JamDex.

According to the report, surveys show that over 500,000 Jamaicans hardly even interact with the local financial sector. It may be because people in Jamaica earn wages in cash and spend it without interacting with players in the financial services sector.

As a result, Jamaica’s central bank will be targeting the government payment to social protection programs to attain substantial inclusion and adoption of the CBDC.

“When we look at the persons we have, Government in any country is the largest payer,” said Dr. Novelette Panton. She added, “So we are going after government payments in that we have welfare payments, social benefit payments, the payments that are made to schoolchildren, payments to persons for housing benefits.”

Other plans Panton stated, according to the report on how the central bank of Jamaica will further boost JamDex, include educating the public on the difference between JamDex and cryptocurrencies as well as the security of the digital currency.

In addition, the Central bank of Jamaica will host Christmas work programs this December so as to encourage individuals to make their payments in CBDCs.

The central bank of Jamaica and mobile wallet provider Lynk are also working together to enrol corner shops and pan chicken vendors to interact with the mobile wallet while making payments with JamDex.

It is worth noting that this news comes months after the Bank of Jamaica (BOJ) suggested that the authority must obtain a court order to track CBDC transactions apart from wallet holders and issuers, as CBDC, such emerging digital currencies, do not have a different code that can be traced.