Bank of Jamaica prepares CBDC pilot for August
The BOJ’s CBDC will provide a more efficient way of paying to complement physical cash and serve the unbanked
The Bank of Jamaica (BOJ) is preparing to pilot its central bank digital currency (CBDC) next month, according to an article in the Jamaica Observer yesterday.
The central bank will continue to issue bank notes and coins, while the CBDC will complement other forms of legal tender, providing a more efficient means of payment. It could also provide more security, as in the case of stolen phones, the CBDC can’t be accessed without a code.
BOJ Governor Richard Byles explained, “It’s instantaneous and it is a very efficient way of paying, in a way that cash cannot. It will reduce the cost of producing, transporting and securing cash which run into billions of dollars each year. There will also be no need for merchants to find change, as payment can be to a cent.”
The CBDC was originally due to start being rolled out in May but the pilot has been pushed back to August. Starting in September, the CBDC will be sold to authorised payment service providers, licensed commercial banks and deposit-taking institutions.
“The financial institutions will mint and sell CBDC to businesses and individuals at a rate of $1 in cash to 1 CBDC,” Byles added. “However, the financial institutions will hold the CBDC in digital wallet accounts at their respective banks for customers to access in order to make purchases, or receive payments from mobile phone to mobile phone.”
The governor believes that Jamaica requires a more robust telecommunications infrastructure in order to achieve mainstream adoption of the CBDC, as well as widespread acceptance among merchants and consumers.
There are many people in the country who are unbanked and the CBDC would give them easier access to financial services, without the need for know your customer (KYC) verification. Byles stressed, however, that this would require the help of telecommunications companies and financial institutions.
The governor concluded, “If you are walking around with your CBDC and nobody wants to take it, we’ll have a problem. The commercial banks will therefore need to put their shoulders behind the wheel as they promote, adopt and recommend it for use to their customers. We also need the Government to support and use CBDCs as much as possible, whether to make PATH, pension or other payments.”