Bank of Jamaica CBDC rollout moves ahead
By ITU News
Only a few years ago, the concept of a central bank digital currency (CBDC) was not something central bankers seriously considered, including those in Jamaica.
Fast-forward to the present day, and that story has changed, said Bank of Jamaica Governor Richard Byles, speaking at the recent DC3 conference held by the International Telecommunication Union (ITU).
“In 2022, we will begin planting roots of digital currency in hearts and minds of citizens,” Byles said, referring to the national roll-out of Jamaica’s CBDC scheduled for the first quarter of this year.
“CBDC is a digital form of central bank-issued currency and is therefore legal tender,” according to Deputy Governor Natalie Haynes. “CBDC is fully backed by the central bank, the sole issuer.”
Jamaica needed two steps to create the enabling framework for its CBDC.
The first was to enact legislation to allow for different know-your-customer (KYC) information, depending on the type of bank account. “Less documentation for smaller accounts,” aims to “reduce resistance to join the formal sector,” Byles explained during his opening remarks at the conference, held by ITU as part of the Digital Currency Global Initiative, a joint initiative of ITU and the Future of Digital Currency Initiative at Stanford University.
The second, already underway, is to issue a national identity card that can be accepted universally as authenticating ID.
These two steps make onboarding new bank customers easier while meeting anti-money-laundering (AML) guidelines, among other regulations, Byles said.
A collaborative rollout
The pilot for the country’s prototype CBDC ended on 31 December 2021, following the announcement of Ireland-based software firm eCurrency Mint as the chosen technology provider. Jamaica’s National Commercial Bank also joined the project to test payment services that could use the CBDC.
Part of the testing included the successful minting of digital currency worth 230 million Jamaican dollars (USD 1.5 million) in August 2021.
With the pilot completed and enabling conditions in place, the next milestone will be the national rollout of the digital currency.
Currently, two additional wallet providers are conducting virtual simulation testing, aiming to pre-order the CBDC from the Bank of Jamaica to distribute to their customers. To ensure interoperability, the central bank is testing transactions between customers of various participating wallet providers.
Jamaica’s recipe for CBDC success
Byles outlined give key ingredients to ensure success for Jamaica’s new CBDC:
- Get major banks to sign on and promote the currency with their business and retail customers. The latter will only find the CBDC useful if it is accepted by frequently patronized merchants, Byles pointed out.
- Mount a national campaign emphasizing the advantages of digital payments – especially zero usage costs. “We need to create confidence, and a cultural change effected through public education.”
- Bring telecom operators on board to proactively stimulate the market. They can do this “by registering as payment-services providers and promoting the new digital currency to their massive customer base, thereby leveraging millions of potential CBCD users.”
- Ensure all government welfare payments are made in CBDC form – a quick win, said Byles. “During the pandemic, Jamaica paid out millions in government aid, but many would-be recipients could not be reached by cheques delivered to postal agencies,” he explained. Consequently, those citizens in need received no assistance. On the other hand, he continued, “every beneficiary with a phone and CBDC account will receive payment instantaneously” – a not-to-miss opportunity to build critical mass.
- Establish the universal national digital ID card. Laws are in place to implement this as a “single source of ID” – vital to the digital currency rollout. “Along with KYC regulations, this will spur the mass issuing of CBDC accounts,” Byles said.
Once the above factors are in place, he adds, CBDC adoption promises to create a transformative impact on doing business in Jamaica.
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