JAMAICA | Digital money to be dominant currency within five years said Holness
KINGSTON, January 14, 2022 - Prime Minister Andrew Holness has told Bloomberg, that he expects more than 70% of the Jamaican population will be using the country’s CBDC digital currency within five years.
In an interview with Bloomberg TV Friday, Holness said the central bank expects to roll out the e-money called central bank digital currency, or CBDC nationally during the first quarter of 2022.
He noted that the new digital currency will reduce banking costs, bring more people into the formal financial system, ensure greater government accountability, and make it easier to track public resources.
“There will be some initial challenges,” he said. “We have to figure out how to give people access to digital devices and the internet in general.”
The Bloomberg article noted that “Jamaica -- along with the Bahamas and the Eastern Caribbean Central Bank -- has become a global pioneer in creating digital currency.
“Unlike better known crypto currencies such as Bitcoin, whose users value their independence from central banks, CBDCs are government-backed digital versions of the local currency.”
Deputy Governor of the Bank of Jamaica with responsibility for Banking, Currency Operations, and Financial Markets, Natalie Haynes, says it is anticipated that by the first quarter of 2022, additional deposit-taking institutions (DTIs) will be on board to enable the issuing of wallets to facilitate an expansion of the number of individuals and businesses utilizing the currency.
National Commercial Bank (NCB) is currently the sole DTI participating in the CBDC pilot, which commenced in June and is slated to conclude in December.
Ms. Haynes said NCB has developed its wallet and has begun testing the facility.
She indicated that the bank is doing so with staff and their family members, adding that “we’re going to roll that out, before year end, to other account holders, namely individuals and small merchants”.
The Deputy Governor said these merchants include vendors, hairdressers and barbers, adding that “they will be doing testing, in terms of person to person and person to business [transactions]; in addition, they are going to be testing cash-ins and cash-outs at the [automated banking machines] ABMs”.
Ms. Haynes noted that the BOJ has also developed a wallet for its staff, adding that its interoperability with NCB’s will be tested, come December.
“An important component of any CBDC [is] for there to be interoperability between all wallet providers,” she further indicated.
CBDC is a digital form of central bank-issued currency and, therefore, is legal tender that can be exchanged dollar for dollar with physical cash.
Households and businesses will be able to use CBDC to, among other things, make payments as now obtains with cash.
CBDC is backed by the issuing central bank and is issued to authorised financial institutions, including deposit-taking institutions, on a wholesale basis as is now being done with physical currency.