On Monday, the Bank of Jamaica announced plans for its central bank digital currency (CBDC). A decision was made in May 2020 to proceed with the CBDC issuance, and laws are being amended to legislate that the Bank is the sole issuer.
A CBDC is viewed as part of the process of upgrading the country’s payment infrastructure. Hence one of the benefits is a modern digital payments system, closely followed by greater financial inclusion.
That’s in part because the account-based currency will be distributed via banks as well other licensed deposit-taking institutions such as payment providers, with appropriate know your customer (KYC) processes.
The Bank of Jamaica also noted the cost savings in forecasting and printing physical currency, although the CBDC will exist alongside conventional cash.
A decision was made not to use blockchain, primarily based on the ease of integration with the Bank’s real-time gross settlement system (RTGS), rather than the merits of the technology itself.
The Bank is planning to pilot the solution between May and December this year as part of its Fintech Regulatory Sandbox. It separately announced that Irish fintech eCurrency Mint would be its technology partner.
Meanwhile, CBDC is grabbing headlines around the world. The Bahamas has already launched its Sand Dollar, and China has entered its second phase of testing. Europe has not yet made a decision but is getting some political pushback, especially in Germany.